Are you a small business owner or self-employed and received a Paycheck Protection Program (PPP) loan and are still waiting for your bank to forgive the loan? Here is some good news for you!
On Wednesday 07/28/21 the U.S. Small Business Administration (SBA) published new guidance designed to simplify and speed up the forgiveness process for businesses and not-for-profits with Paycheck Protection Program (PPP) loans of $150,000 or less.
The SBA also announced that it will launch a new application portal Aug. 4, allowing borrowers to apply for forgiveness directly with the agency instead of having to go through their lender. More than 600 banks have agreed to allow access to the portal for more than 2.17 million borrowers.
In a 29-page interim final rule (IFR), the SBA introduced a COVID Revenue Reduction Score that can be used at the time of forgiveness to document the required revenue reduction for second-draw PPP loans. The new IFR also establishes a direct borrower forgiveness process for lenders that choose to opt in as an alternative method of processing loan forgiveness applications.
Despite earlier moves to streamline the forgiveness process for those loans, many smaller PPP lenders have informed the SBA that they lack the technology and manpower to develop efficient electronic loan forgiveness platforms to process applications.
Overwhelmed by the volume of PPP loans and mindful of the statutory 60-day requirement for lenders to issue a forgiveness decision to the SBA from receipt of the borrower’s loan forgiveness application, many smaller lenders are limiting when they will accept forgiveness applications from borrowers. This policy leaves borrowers uncertain if they will have to start making payments on their PPP loans while they are waiting for their lenders to process their forgiveness applications.
In addition, the SBA said it has heard concerns from PPP lenders of all sizes that the requirement for borrowers to submit and lenders to review revenue reduction documentation at the time of forgiveness is delaying the forgiveness process for second-draw PPP loans of $150,000 or less.
The first monthly payments of the expanded and newly-advanceable Child Tax Credit from the American Rescue Plan will be made starting July 15. Most families will begin receiving monthly payments without any additional action. Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 to 17.
People who don’t need to file a 2020 federal tax return can also use the Non-filer Sign-up Tool to register to receive the advance CTC payments, the Third Round Economic Impact Payment, and the Recovery Rebate Credit.
The IRS encourages people to request payments via direct deposit, which is faster and more secure than other payment methods. People who don’t have a bank account should visit the Federal Deposit Insurance Corporation website for details on opening an account online. They can also use the FDIC’s BankFind tool to locate an FDIC-insured bank.
This link will also taxpayers to opt out of receiving the advanced tax credit if they prefer to receive the entire credit at one time when they file their 2021 federal income tax return. However, you must create a separate account for both the taxpayer and spouse since the IRS requires both parents in a two-parent household to unenroll separately.
It is too late to opt out of the July 15 payment, but you can opt out of all subsequent payments if you sign up now.
Finally, like the 2020 stimulus payments, this is an advance against the actual credit that will be calculated when taxpayers prepare their 2021 tax returns. So taxpayers must keep track of all advance payments received to prevent delays in the IRS processing their 2021 tax refunds.
The IRS has opened an online site to enable taxpayers to unenroll from receiving advance payments of the 2021 child tax credit (CTC).
The new “Child Tax Credit Update Portal” allows parents to view their eligibility, view their expected CTC advance payments, and, if they wish to do so, unenroll from receiving advance payments (i.e., to opt out). Unenrolling may be desirable if, for instance, taxpayers expect the amount of tax they owe to be greater than their CTC refund when they file their 2021 tax return.
In a set of new FAQs, the Service answers questions about unenrolling from the CTC advance payments.
2021 child tax credit
Under the American Rescue Plan Act (ARPA), P.L. 117-2, the IRS must make 2021 periodic advance child tax credit payments to taxpayers up to the “annual advance amount.” These payments — up to $300 per month per child under age 6 and up to $250 per month per child age 6 through 17 — will be paid in equal amounts and made no earlier than July 1, 2021, and no later than Dec. 31, 2021.
For tax year 2021 only, ARPA increased the child tax credit amount to up to $3,000 for each qualifying child between age 6 and 17 at the end of the 2021 tax year, and $3,600 for each qualifying child under age 6 at the end of the 2021 tax year. ARPA also made the child tax credit for 2021 fully refundable if the taxpayer (or spouse, on a joint return) has a principal place of abode in the United States for more than one-half of the 2021 tax year.
Last week, the Service opened an online site called the “Non-Filer Sign-Up Tool” that enables parents who are not required to file a 2019 or 2020 individual income tax return to sign up to receive 2021 CTC advance payments.
The IRS also, in Rev. Proc. 2021-24, clarified how individuals who are not otherwise required to file 2020 returns can claim 2021 CTC advance payments by either filing simplified returns or electronically filing a 2020 return with zero adjusted gross income.
Tax Day for individuals extended to May 17: Treasury, IRS extend filing and payment deadline
WASHINGTON — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17
The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.
Last month, the Maryland General Assembly passed the RELIEF ACT of 2021 MD SB496) which extended the due date of Maryland income tax returns to July 15, 2021
Today many taxpayers woke up to find they had more money in their bank accounts thanks to the Third Round of Stimulus checks.
On March 11 President Biden signed the American Rescue Act (ARA) into law. The ARA provides up to $1,400 for eligible taxpayers ($2,800 per married couple) and an additional $1,400 per adult dependent children.
The stimulus payment is tied to your 2020 federal adjusted gross income (AGI) if you have already filed your 2020 return; or your 2019 AGI if you have not filed your 2020 return yet. The stimulus payment will phase out for single taxpayers with income between $75,000 and $80,000, heads of household with incomes between$112,500 and $120,000 and couples filing jointly with income between $150,000 and $160,000.
So if the Treasury Department has your bank account information on file, you should keep checking your bank account for your direct deposit. If your bank information is not on record, you will receive payment in the form of a paper check or debit card so keep an eye on your mail. And double check anything that looks like a credit or debit card.
On Saturday 03/06/21 the US Senate passed their own version of the 2021 COVID relief bill, for a cost of $1.9 Trillion, which is expected to be passed by the House as soon as Tuesday 03/09/21.
Here are some key provisions:
Direct payments of up to $1,400 per individual.
Extension of $300 federal subsidy of weekly unemployment benefits to September 6, 2021.
Up to $10,200 of unemployment benefits exempt from federal income tax.
If you received unemployment benefits in 2020, you may want to hold off filing your tax returns until the bill is passed and the IRS (and software vendors) have the opportunity to incorporate the new law into the tax software.
If you have already filed your return, or do not want to wait for the new changes, you will need to file an amended tax return to receive any additional refund you may be due as a result of the new law.
Expansion of child tax credit, up to $3,600 for children under 6, and $3,000 for children up to 17.
Expansion of the Earned Income Tax Credit.
$14 Billion payroll support for U.S. Airlines as long as they do not furlough or cut employee’s pay rates through 09/30/21.
Additional funding for Covid-19 vaccine distribution.
On February 27, 2021 the House of Representatives passed their $1.9 trillion stimulus plan. The bill was sent to the Senate and a vote is expected as early as Wednesday, March 3, 2021.
Here are some of the key provisions in the House bill:
Recovery rebates
The House bill provides individuals with a $1,400 recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent for 2021. As with the two recovery rebates enacted in 2020, the IRS will make advance payments, which the Service has been calling economic impact payments. The recovery rebate credit phases out for taxpayers with adjusted gross income (AGI) over $75,000 ($150,000 for married filing jointly) and uses 2019 AGI to determine eligibility unless you have already filed your 2020 return.
Child tax credit
The bill increases the amount of the credit to $3,000 per child ($3,600 for children under 6). The increased credit amount phases out for taxpayers with incomes over $150,000 for married taxpayers filing jointly, $112,500 for heads of household, and $75,000 for others.
Child and dependent care credit
The bill makes changes to the Sec. 21 child and dependent care credit, including making it refundable for 2021. The bill also increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021.
Unemployment Compensation
One item not included was the Durbin/Axne proposal to exempt unemployment compensation benefits received from taxable income. It is unlikely that this proposal will be included by the Senate. However, as mentioned 2 weeks ago, Maryland passed SB496 providing a subtraction from Maryland income for certain unemployment insurance benefits.
If you have/are receiving unemployment benefits for 2020, we strongly recommend that you hold off in filing your 2020 tax returns until the Maryland changes can be implemented in your tax preparation software. If you have already filed your 2020 return, you may need to file an amended tax return to recover any Maryland state and local income tax paid on your benefits.
One new provision of the CARES Act passed this past April allows taxpayers to claim a deduction for up to $300 for charitable donations, even if they are taking the standard deduction. However, the requirement for contemporaneous acknowledgement from the donee organization is still required if you donated more than $250 in total during the year to a single organization.
