Timothy W. Tuttle & Associates
Volume 18 Edition 01 Please email comments to email@example.com Jan 2021
Major Events This Month:
†- 4th Quarter Estimated Payments Due
†- Martin Luther King Jr. Day
Start tax filing for 2020
†- Organize filing records (W-2s, 1099s, 1098s, etc.)
†- Schedule tax appointment for drop off or meeting
Start tax planning for 2021
†- Create simple budget
†- Adjust withholdings
†- Rebalance investment portfolio
Happy New Year!
The new year begins with more stimulus payments and other financial assistance courtesy of the latest COVID relief legislation. Read about how the new bill affects your tax and financial outlook.
Also in this month's edition is good news for business owners regarding the tax deductibility of expenses paid for using PPP loan funds that are forgiven. You can also determine how much to contribute to your retirement fund in 2021 and see what Uncle Sam came up with for his New Yearís resolutions.
Please call if you would like to discuss how this
information could impact your situation. If you know someone who can benefit
from this newsletter, feel free to send it to them.
You could soon see another stimulus payment in your bank account with the recent passage of the Emergency Coronavirus Relief Act of 2020, which means more direct relief to you and your family. Here are some of the major points you need to know that are buried inside this $900 billion piece of legislation.
Direct stimulus payments to you. The legislation includes a $600 payment per person, including adults and dependent children who are under age 17. Payments are based on your 2019 income and should start being distributed shortly, per Treasury Secretary Mnuchin. The payment amount phases out for adjusted gross incomes over $75,000 for single taxpayers and $150,000 for married couples.
Things to consider:
Extension of unemployment benefits. Federal unemployment benefits of up to $300 per week are extended through March 14. Benefits for self-employed workers, set to expire at the end of 2020, are also extended.
Things to consider:
New PPP loan funds. There is additional money available from the Small Business Administration (SBA) for a new round of PPP loans. The new loan program is targeted to businesses that need the funds. To qualify, your business must have 300 or fewer employees and have seen a drop in revenue of 25% or more during any quarter in 2020. Some of the money is earmarked for very small borrowers, underserved communities, and small lenders. There are even simplified requirements for forgiveness if the loan amount being applied for is less than $150,000.
Eviction moratoriums and rent assistance. The bill extends until January 31, 2021 a moratorium on evictions that was scheduled to expire at the end of 2020. The bill also includes $25 billion in emergency assistance to renters.
There is much more in this huge bill, including relief
for hard-hit industries, education, student loans, and vaccine assistance.
Please keep up-to-date as more is learned after a full review of the bill is
If you or your business received funds from the Paycheck Protection Program (PPP), the recently passed Emergency Coronavirus Relief Act of 2020 will help to dramatically cut your tax bill. Hereís what you need to know.
The PPP program was created by the CARES Act in March 2020 to help businesses which were adversely affected by the COVID-19 pandemic. Qualified businesses could apply for and receive loans of up to $10 million. Loan proceeds could be used to pay for certain expenses incurred by a business, including salaries and wages, other employee benefits, rent and utilities.
If the business used at least 60% of loan proceeds towards payroll expenses, the entire amount of the loan would be forgiven.
While the CARES Act spelled out that a businessís forgiven PPP loan would not be considered taxable income, the legislation was silent about how to treat expenses paid for using PPP loan proceeds if the loan was ultimately forgiven.
Congress intended for these expenses to be deductible for federal tax purposes. But since the legislation was silent on this issue, the IRS swooped in and deemed these expenses to be nondeductible.
There was considerable debate over the latter half of 2020, with Congressional politicians explaining that their intent was that the expenses be deductible and the IRS responding ďToo bad, theyíre nondeductible.Ē
Congress overruled the IRSís position in the Emergency Coronavirus Relief Act of 2020. The legislation officially makes deductible for federal tax purposes all expenses paid for using proceeds from a forgiven PPP loan.
Stay tuned for updates as to how this new legislation
affects your business.
As part of your 2021 tax planning, now is the time to review funding your retirement accounts. By establishing your contribution goals at the beginning of each year, the financial impact of saving for your future should be more manageable.
∑ $19,500 for 401(k), 403(b), most 457 plans and the federal governmentís Thrift Savings Plan. The catch-up contribution limit for employees age 50 or older in these plans is $6,500 (even if you donít turn 50 until December 31, 2021, you can make the additional $6,500 catch-up contribution for the year).
∑ $6,000 for Individual Retirement Accounts (Traditional or Roth) and the catch-up limit is $1,000.
∑ $58,000 for SEP IRA or solo 401(k) plans, or if your employer allows after-tax contributions to your 401(k).
∑ $13,500 for SIMPLE retirement accounts and the catch-up limit is $3,000.
∑ $230,000 for defined benefit plans.
If you have not already done so, please consider:
As new year's celebrations are in the rearview mirror, it's nice to continue celebrating the resolutions that we are definitely going to achieve! So we asked Uncle Sam - yes that Uncle Sam - what his new year's resolutions were.
This is what he told us...
Thanks, Uncle Sam! With all the hardships last year, it's always nice to find a way to smile, even if for a brief moment.
Common New Yearís resolutions are to lose weight or become more active. Perhaps 2021 is the year to shift focus. Here are seven tips to help you become more financially fit.
Acting on all these tips may seem a bit overwhelming. By
focusing on a few now, before you know it, your financial wellness will improve
Here are three tasks to consider that will make meeting your business's information reporting requirements less stressful this tax season.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.
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The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.
Timothy W. Tuttle & Associates