Anthony Sykes & Company

          One of the lifelines for Small Businesses last year was the Paycheck Protection Program ( PPP ). There was also the Employee Retention Credit ( ERC ). Both were a part of the CARES Act in March 2020. Until the Taxpayer Certainty and Disaster Tax Relief Act of December 2020, they were essentially treated as separate. A business would have had to choose between one or the other. Now they can participate in both and the Internal Revenue Service ( IRS ) has released guidance on this subject.           Getting involved in both forms of relief is certainly an attractive option to most businesses. However, there is no “one size fits all” path to COVID-19 relief. PPP funds are still very difficult to acquire and this guidance allowing for ERC use is still new. Keeping good records and talking to your Qualified Tax Professional is essential at this point. This is a situation that is constantly changing, w...

                 For those who felt left out of the last 2 Paycheck Protection Program ( PPP ) openings, there is another chance. Starting on February 24, and continuing for 2 weeks, there is an exclusive window for Small Businesses with 20 employees or less to apply for a PPP loan. This is a particular group that has felt shut out of the program to this point.           This means that sole proprietors and independent contractors will have an even greater opportunity to receive this funding. However, the calculations that would increase the amounts of the loans for these Small Businesses will not be updated by the Small Business Administration ( SBA ) until March 1 . Specific written guidance will also be issued at that time. So it might be best for business owners to wait until that time so their applications will be subject to the most updated rules.

     The second round of Economic Impact Payments ( EIP ) are being sent out by the Internal Revenue Service ( IRS ) as fast as possible. To speed up the delivery, many will receive these funds as a debit card in the mail. The IRS does not make the determination of who receives a card, and your particular form of payment might be different from the last time. They are being sent to all 50 states, so watch your mail if you qualify and have not received your EIP yet. It has been stated that Taxpayers in the Western US are more likely to be sent a card. The Get My Payment tool is useful to determine your EIP status.

     The new COVID relief package ( Consolidated Appropriations Act, 2021 ) was signed on December 27. A Bill like this is unlikely to be changed after it has been signed. This means we have a much clearer understanding of what it will provide.      This is actually part of a larger piece of legislation that includes funding the government until September 2021. The COVID relief part of the law renews many of the programs created with the Coronavirus Relief and Economic Security ( CARES ) Act. For example, the Paycheck Protection Program ( PPP ) will continue. There is also a clarification that businesses can deduct expenses paid with funds from a forgiven PPP loan. There will be an extension of Federal Pandemic Unemployment Assistance ( FPUA ). This allows for Unemployment Insurance for Independent Contractors and those who work in the Gig Economy. This will go in effect 1 week later due to the delay in signing the Bill. Another round of Economic Impac...

     The Internal Revenue Service ( IRS ) is making a special effort to make sure that taxpayers know about a special charity deduction that is available this year. The year of 2020 has affected all of us in different ways. However, because of the unique challenges faced this year, some may feel even more motivated to give to charities. The Coronavirus Aid, Relief and Economic Security ( CARES ) Act gives extra encouragement to do so.      This special tax law allows for a $300 tax deduction without the need to itemize your Tax Return. This special deduction will allow for some extra tax savings while using the standard deduction. To qualify, these donations must be made by cash, check, debit or credit card. Good records must be kept, including having a receipt or acknowledgement letter from the charity to file with your Tax Return. Please check to make sure that the organization you choose is eligible for tax-deductible donations. Make an appointment wit...

     This is normally the time of year to reflect on what has happened during the previous months. There is much to consider on that topic if you choose to do so. For many, this is also a time to make donations, and perhaps use those donations as tax deductions.      The Internal Revenue Service ( IRS ) has changed some of those rules for 2020. This is due to the passage of the Coronavirus Aid, Relief and Economic Security ( CARES ) Act earlier this year. Taxpayers can now deduct charitable contributions even if they do not itemize their deductions. However, they must still go to qualifying organizations that are religious, charitable, educational, scientific, or literary in purpose. They need to meet certain requirements and Taxpayers need to have the right documentation to present to the IRS . Your Qualified Tax Professional can help you make sure that your valued gift goes to the right place.

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts has shed some light on what to do in different situations.      This post will give the best reason why a borrower might want to wait to submit their application. Some businesses have potential forgiveness reductions . Our last post discussed how fewer full-time employees or reductions in salary would impact the qualified expenses that could be claimed.      It may be best for some of these businesses to wait until after December 31 to file their applications to see if they were able to restore any of their employees and/or salaries. That would allow them to qualify for what are known as Safe Harbors and not have to reduce t...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts will shed some light on what to do in different situations.      The last post shared why a borrower might apply early and may want to wait. Another reason to wait is if the borrower has reductions to forgiveness due to fewer full-time employees or reductions in salary . It would be best to wait until the end of their covered period. This is because the reduction applies to all qualified expenses, not loan forgiveness. At the end of the covered period all the expenses can be added and then reduced by the necessary amount. If this is greater than the loan, a borrower can still qualify for full forgiveness. A Qualified Tax Professional is esse...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this post and the ones that follow will shed some light on what to do in different situations.      If you are using the last of funds or coming to the end of the forgiveness period, the application is not required until 10 months after the end of that forgiveness period. With that understanding, you do not have to wait. If the money’s all gone and you are confident that full forgiveness can be reached, it makes sense to apply. This is one reason why it makes sense to wait.      Applying early will not change forgiveness reductions . For example, if a business has reduced salaries of employees by 25%, that must be accounted for during the entire ...

     Millions of Taxpayers have, or are currently, receiving unemployment funds. Many are doing so for the first time due to the COVID-19 pandemic. Those who are taking part in this compensation need to know that it is taxable income. These benefits will be reported to the Internal Revenue Service ( IRS ) and must be stated on your Federal Income Tax Return for the year it was received. This would include the extra compensation provided by the Coronavirus Aid, Relief, and Economic Security ( CARES ) Act.      To avoid surprises next year, Taxpayers can choose to have tax withholdings applied right now. Usually the agency has their own form for this use. If you do not choose voluntary withholding, estimated quarterly payments can be made. Either way, for those who have received any unemployment compensation this year can expect a Form 1099-G next January. It will list the amount of unemployment income for this year and the amount of tax that was withheld...

     The Internal Revenue Service ( IRS ) is sending out a special letter to make sure as many as possible know about the Economic Impact Payment ( EIP ). For US citizens and alien residents with Social Security numbers and low or no earned income, the IRS is sending out letters to encourage them to check their eligibility. Just because they receive a letter does not mean they qualify, but there are many who can receive a payment who may not realize it. Depending on the situation, they may be able to use a tool on the IRS website, or need to file their 2018 or 2019 Tax Return.        This is a situation that is filled with potential for fraud. The letter will have a return address of an IRS office. The IRS will never send a text, email, or make a phone call related to EIP . They will never ask you to open any attachments or share personal financial information. Go directly to the IRS and their website ( www.irs.gov ) if you have any questions,...

When the Paycheck Protection Program ( PPP ) was first announced, many saw it as the answer to their COVID-19 related business issues. There was a rush to get applications in, especially when it was revealed that these loans may not have to be paid back if certain requirements were met. Now, as the dust begins to settle, we are getting a better idea about who makes these decisions. The Small Business Administration ( SBA ) has a great deal of discretion over how a PPP loan will be paid back. They decide if the loan can be forgiven or how much will be paid back. In addition, there is currently little guidance on how to appeal their written final decisions. The only SBA decisions that can be appealed are if the borrower was determined ineligible for a PPP loan, for the loan amount received, if the loan amount was used for ineligible purposes, or if the borrower was ineligible for full or partial loan forgiveness. This process is handled by a special SBA office. They will not rev...

     One of the key features of the Paycheck Protection Program ( PPP ) was that these business loans could be partially or entirely forgiven. This would be based on whether the funds were spent on wages, keeping employment levels the same as they were before the COVID-19 pandemic, and other factors. Of course, proof would have to be provided that these requirements have been met and an application needs to be submitted. All of that has now been put on pause.      Those Forgiveness Applications will not be accepted until August 10 at the earliest. Part of the reason is that the Treasury Department has not yet issued the final guidance on those applications. That may be because the US Senate is looking into another round of economic stimulus, which will certainly change the procedures related to forgiving PPP loans. What will happen remains to be seen, so for now we will all need to exercise some patience.

     For those looking for help with COVID-19 relief, it looks like more help is on the way. Last week the Paycheck Protection Program ( PPP ) Flexibility Act of 2020 was passed in Congress. This will improve the PPP experience by making rules for getting loan forgiveness a little easier.      One major change is the amount of time given to businesses to use the proper loan amount. Originally, business owners had 8 weeks from the time the loan was given to spend 75% of it on Payroll costs. If this obligation was met, it could qualify for complete loan forgiveness. Many felt this was unrealistic considering the need to pay rent and utilities. With the PPP Flexibility Act, borrowers can take up to 24 weeks to spend 60% on Payroll costs and potentially reach the same outcome.      This new Flexibility Act changes many aspects of how PPP is calculated. It now becomes a more attractive option for COVID-19 relief as it was intended, i...

          Millions of individuals waiting for their Economic Impact Payments ( EIP ) will soon find out they are coming in the form of a debit card instead of a check. This is another way to provide the much needed funds in an efficient and secure way. A group within the Treasury Department makes the determination of who will receive a debit card. The information that comes with the card will make it clear that this card is prepaid with the EIP funds.           The debit card can be used just like any other card. Cash can be withdrawn or transferred to your personal account. Using a card like this will automatically provide protections against things like fraud and loss. If you have not received your EIP in Direct Deposit, paper check, or debit card form, please continue to be patient.

        Many Small Businesses are anxiously awaiting an opportunity to have their share of some of the COVID-19 relief provisions that have been made by the Coronavirus Relief and Economic Security ( CARES ) Act. The most well-known is the Paycheck Protection Program ( PPP ). We have written about this program in the past. One reason it is so attractive to businesses is that a loan of up to $10 million can be forgiven if the owner follows some simple rules and applies all of the money to the firm and its employees. Now the Internal Revenue Service ( IRS ) has weighed in on how this changes what a business can deduct.           During normal times, a business can deduct things like wages and rent. These are the same expenses the loan in the PPP is expected to be used for. With that understanding, the IRS has now stated that anything the PPP is used for cannot be deducted from taxes for the business. The reasoning i...

           The emergency funding provided by the Paycheck Protection Program ( PPP ) seems to have slowed down. There are billions of dollars still available, but lenders say that demand is down. Many businesses put in loan applications with different banks, when one got approved they pulled the other ones. Some businesses decided that they no longer qualified, while others did not want to share necessary payroll details in their applications.           A number of the businesses that are no longer interested in this program cite confusion for removing their applications or declining their loans. The Coronavirus Relief and Economic Security ( CARES ) Act made the PPP possible. It was the Small Business Administration ( SBA ) that stated 75% of the loan must be used for employees by the end of June in order to qualify to be forgiven. Many industries have no work to pay the employees for. How can these funds b...

               Many Economic Impact Payments ( EIP ) have been processed and deposited. Others will soon be deposited or mailed. The typical amounts for those who qualify have been widely publicized, but some are finding out that their EIP is not the amount that they had expected. There are a few reasons why.           Tax Returns . For most individuals or couples, their EIP will be based off of the 2019 Tax Return. If it has not been filed, or not yet processed, 2018 will be used. So any changes between those years will not be reflected in the payment. Dependents . To qualify to receive an extra $500 for a claimed dependent, they must have a Social Security Number and be age 17 or younger. If a Taxpayer over the age of 17 is claimed, then they cannot receive a $1,200 payment of their own. Other Taxpayers may get a payment with an odd amount.        ...

         There is a lot of confusion and frustration surrounding the details of the Coronavirus Relief and Economic Security ( CARES ) Act. One particular area that aggravates Taxpayers is the Economic Impact Payment ( EIP ). Many are wondering when this check or deposit will arrive for them and their families. Different provisions have been made to make sure that those who qualify are not left out. The Internal Revenue Service ( IRS ) is now making it clear that those who do not file a Tax Return because their income is too low, may also qualify for this payment.           The IRS is encouraging these individuals to use this online tool to provide information on where to send the stimulus funds. It is the same online tool other Taxpayers had been using to update their information and to claim dependents. Since a person who does not need to file a Tax Return is generally unknown to the IRS , they need to use...

On April 27, the Paycheck Protection Program ( PPP ) restarted with $310 Billion dollars ready to loan to Small Businesses. This time there are promises to learn from earlier mistakes. For example, $60 Billion is reserved for smaller community banks, and no bank can process more than $60 Billion in loans. This is thought to create a sense of equality and pacing for all businesses looking to seek relief. The Small Business Administration ( SBA ) is trying to keep large corporations from squeezing out loan access for small shops. How did things work out the first week? There were widespread complaints about the online application system. E-Tran continues to crash and is overloaded by the number of users and applications that are uploaded. With that said, the SBA claimed it processed 100,000 loans from 4,000 lenders on Monday alone. Community banks feel that this is worse than their first try. While there is a limit of $10 Million per application, many feel that this funding will...