The second round of PPP Loans is coming. Here’s what you need to know:
The new law allows some businesses to apply for a second loan. To qualify, businesses must have spent all of their first loan, have less than 300 employees and prove that they lost 25% or more of revenue in any quarter in 2020 either on a quarterly or annual basis.
“During the first round of PPP, a lot of businesses had a hard time even gathering what their net income was because they didn’t have proper bookkeeping,” said Sheneya Wilson, CPA and founder of Fola Financial in New York. “Now, you kind of have to show comparative statements.”
That means businesses will generally need to have their 2019 tax return on hand as well as profit and loss records to show that they’ve had at least one quarter where revenue fell 25% or more. A tax professional will be able to help businesses make sure they’re eligible and have the correct documentation, said Wilson.
These second loans will be made on a similar recommendation to the first round of PPP – 2.5 times payroll costs – and will also be capped at $2 million.
AABS Inc. is here to help you through the process.
Call us today to get started 919-303-3345.
February 1 is the deadline for employers to issue and file wage statements
Employers must file Form W-2 and other wage statements by Monday, February 1, 2021. This is also the date Form W-2s are due to employees.
By law, employers are required to file copies of their Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. However, since January 31 falls on a Sunday in 2021, the deadline is the next business day, Monday, February 1.
Form 1099-MISC, Miscellaneous Income and Form 1099-NEC, Nonemployee Compensation, are also due to recipients on February 1, 2021, with some exceptions. Other due dates related to Form 1099 are listed in the instructions for these forms.
Timely filing helps prevent fraud.
Filing wage statements on time and without errors is beneficial to employers and the IRS. The employer avoids penalties, and the IRS has time to verify income taxpayers report on their tax returns, which helps prevent fraud.
E-file is the quickest, most accurate and convenient way to file these forms. The law requires certain filers who file 250 or more information returns for any calendar year to file electronically.
Employers should plan and prepare early.
Good preparation now can help employers avoid problems later. For instance, employers can start by verifying or updating employee information, such as:
• Social Security numbers
• Individual Taxpayer Identification Numbers
Employers should be sure their account information is current and active with the Social Security Administration as soon as possible. Lastly, employers should order paper Form W-2s, if needed.
Automatic extensions of time to file Form W-2s are not available. The IRS will only grant extensions for very specific reasons. For details, employers should read the instructions for Form 8809, Application for Extension of Time to File Information Returns.
Get a Jump on your Taxes
Steps you can take now to make tax filing easier in 2021
What’s new and what to consider when you file in 2021
New things taxpayers should consider as they get ready to file taxes in 2021
When people get ready to file their federal tax return there are new things to consider when it comes to which credits to claim and what deductions to take. These things can affect the size of any refund the taxpayer may receive.
Here are some new key things people should consider when filing their 2020 tax return.
Recovery rebate credit
Taxpayers may be able to claim the recovery rebate credit if they met the eligibility requirements in 2020 and one of the following applies to them:
• They didn’t receive an Economic Impact Payment in 2020.
• They are single and their payment was less than $1,200.
• They are married, filed jointly for 2018 or 2019 and their payment was less than $2,400.
• They didn’t receive $500 for each qualifying child.
Refund interest payment
People who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income, to anyone who received interest of at least $10.
New charitable deduction allowance
New this year, taxpayers who don’t itemize deductions can take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For more information, people should review Publication 526, Charitable Contributions.
Other refund-related reminders
• Taxpayers shouldn’t rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some tax returns may require additional review and processing may take longer.
• Refunds for taxpayers claiming the earned income tax credit or additional child tax credit can’t be issued before mid-February. This applies to the entire refund, not just the portion associated with this credit.
• The fastest and most secure way to receive a refund is to combine direct deposit with electronic filing, including the IRS Free File program. Taxpayers can track the status of their refund using the Where’s My Refund? tool.
Tips to help people stay safe online
These days most people are spending more time at home and a lot more time online. Whether people are online for work, school, a virtual gathering or shopping, online security is more important than ever.
Everyone should be mindful of risks they may encounter when they share devices, shop online and interact on social media.
Taxpayers might find the online security overwhelming, but it doesn’t have to be. Even those who aren’t super tech-savvy can stay safe online.
Remember security is important.
No one should reveal too much information about themselves. People can keep data secure by only providing what is necessary. This reduces online exposure to scammers and criminals. For example, birthdays, addresses, age and especially Social Security numbers are some things that should not be shared freely. In fact, people should not routinely carry a Social Security card in their wallet or purse.
Use software with firewall and anti-virus protections.
People should make sure security software is always turned on and can automatically update. They should encrypt sensitive files stored on computers. Sensitive files include things like tax records, school transcripts and college applications. They should use strong, unique passwords for each account. They should also be sure all family members have comprehensive anti-virus protection for their devices, particularly on shared devices.
Learn to recognize and avoid scams.
Everyone should be on the lookout for scams. Thieves use phishing emails, threatening phone calls and texts to pose as IRS employees or other legitimate government or law enforcement agencies. People should remember to never click on links or download attachments from unknown or suspicious emails. If someone calls asking for personal information, people should not to give out such details.
- Protect personal data.
Adults should advise children and teens and other young users to shop at reputable online retailers. They should treat personal information like cash and shouldn’t leave it lying around.
- Know the risk of public Wi-Fi.
Connection to public Wi-Fi is convenient and often free, but it may not be safe. Hackers and cybercriminals can easily steal personal information from these networks. Always use a virtual private network when connecting to public Wi-Fi.