The world of accounting is never boring, and 2021 is already proving this to be true.
Here are several updates and deadline extensions for individuals and businesses to consider.
IRS extends April 15 deadline to May 17
The IRS has extended the April 15 deadline to Monday, May 17. This extension does not apply to estimated tax payments for businesses or individuals, corporate income tax payments and return filings, and trust income tax payments and return filings. These payments and returns are still due April 15.
The Minnesota Department of Revenue (DOR) is reviewing the IRS announcement and will issue a statement soon on the state tax deadline. PWB will continue to work diligently to prepare your tax returns and we ask that you submit your information as soon as possible so that we can keep work flowing.
Paycheck Protection Program (PPP) application deadline extension
On March 16, the U.S. House of Representatives voted 415-3 to extend the PPP application deadline from March 31 to May 31. The legislation has been sent to the U.S. Senate for consideration.
Borrowers may use gross income to calculate maximum PPP loan amount
The U.S. Small Business Administration (SBA) issued new Paycheck Protection Program (PPP) rules that allow self-employed individuals who file Form 1040, Schedule C, Profit or Loss From Business, to calculate their maximum loan amount using gross income instead of net profit.
This change opens the door for larger loans to self-employed individuals, many of whom don’t record much, if any, net profit on their Schedule C.
Note: The SBA and Treasury have ruled that borrowers whose PPP loans already have been approved cannot increase their loan amount based on the new methodology.
Employee Retention Credit (ERC)
The ERC has been extended through the end of 2021 and the qualification requirements have been eased. It is now also available to startup firms that opened a trade or business after February 15, 2020, with average annual gross receipts that do not exceed $1 million.
The first $10,200 of unemployment benefits is excluded from 2020 taxable income for people with adjusted gross income (AGI) of less than $150,000. There is no phase out. If AGI is $150,000 or greater, no exclusion is available. If both spouses receive unemployment benefits, each spouse may exclude up to $10,200. If you have already filed your 2020 return and did not take advantage of this exclusion, do not file an amended return yet. We are awaiting guidance on how to proceed with filed individual returns.
If you have questions about these deadline extensions and other updates, we’re here to help.
Contact your PWB advisor.