Have taxes on your mind this month? Our partners at H&R Block and Small Business Roundtable do, too. During a recent webinar, they shared these key things that entrepreneurs need to know.
• Five most important pieces of tax legislation that include a variety of broad and directed COVID-19-related relief for individuals and in particular small businesses:
- FFCRA, enacted 3/18/20
- CARES Act, enacted 3/27/20
- PPPFA, enacted 6/5/20
- CAA, enacted 12/27/20
- ARPA, enacted 3/11/21
• Key provisions of these laws:
- Paycheck Protection Program (PPP)
- Employee Retention Credit (ERC)
- Credits for paid sick and family leave
- Economic Injury Disaster Loans (EIDLs)
- Payroll Tax Deferral (PTD)
- Net operating loss (NOL) changes
- Targeted business relief (restaurants, venues, etc.)
- Funding to states
• Other federal tax changes:
- NOL changes allowed more refunds for prior years
- Qualified improvement property depreciation period
- Non-taxable targeted EIDLs
- Non-taxable restaurant revitalization grants
- Many program extensions (PPP, ERC) through EOY 2021
- Expanded employer dependent care benefit limits
- Full meal deductions (for 2021 and 2022)
- Retroactive 2020 UI exclusion of up to $10,200
• Independent state relief programs:
- Many states offering their own small business relief
- ARPA includes additional funds for states
- States do not always conform to all the new laws
• Potential tax issues of running a business from home:
- States tax their businesses based on the concept of “nexus”
- Some states could lose billions in income and sales tax revenue due to changes in business behavior
- Has led some states and localities to adopt aggressive tax stances (consider if your business operates without a storefront or online; targets new customers in different locations than before; has remote employees; or changed its expenses)
• Looking ahead:
- What are some new strategies to consider for your business?
- Does this change tax preparation for your business?
- What are lessons small business can learn?
- Do you know enough about these new laws to feel confident come tax time?