Important Tax Changes for Businesses when Filing 2020 Taxes

Our previous article discussed an overview of some tax law changes that you should be aware of when filing your 2020 taxes, with the promise of more information to come.  Well, in this article we turn to some changes that you should know about with regard to business taxes.  We knew, with all of the legislation passed due to the Coronavirus, that there is just too much to discuss in just one article.  

When Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act); the Families First Coronavirus Response Act; the Setting Every Community Up for Retirement Enhancement Act (SECURE Act); and the Taxpayer Certainty and Disaster Tax Relief Act of 2019; each one had something that applied to businesses.  

Businesses were, and still are, struggling with the pandemic.  If you are a business owner, you are likely trying to figure out how to run a business differently, how to keep people safe, how to make enough money to pay everyone, and how to decipher all the tax changes thrown at you.  It is a lot for a company to handle, and the best way to make sure you are prepared is to contact a Sarasota, Florida tax planning filing solution attorney.

The Law Office of Mary E. King, P.L. can make sure that your tax issues are resolved efficiently and at the lowest cost to you.  Please fill out our online contact form , or call us at 941-906-7585 today.

Payroll Tax Credits

This tax year, your business qualifies for a 50% refundable payroll tax credit , if your business was impacted by the virus, and had to shut down.  The tax credit also applies if, for the same quarter the previous year, you lost 50% or more in gross receipts.  

Employers are also allowed to delay their employer-paid Social Security payroll tax.  This legislation allows employers to delay the payment due date until January 1, 2021, which means that half will be due on December 31, 2021, with the next half due on December 31, 2022.  These changes were supposed to help businesses stay afloat, but the logistics of determining how much to pay, and when to pay, is complicated and best handled by a Sarasota tax planning filing solution attorney.

Tax Suspensions

We all know how scarce hand sanitizer became when the pandemic hit.  It seemed almost impossible to find any at the store, and people were trying to sell it online for astronomical amounts, thereby taking advantage of consumers and businesses that needed to stock it in their stores.  

Part of the tax result of the shortage and the need for more hand sanitizer was that any excise tax on alcohol used to make hand sanitizer was suspended for the tax year 2020.  In addition, aviation excise taxes were suspended during 2020.

Caveat to the Paycheck Protection Program

More than 4.8 million businesses took advantage of the Paycheck Protection Program (PPP) in 2020.  This money was for helping small businesses during the pandemic.  If you received one of these loans, then it is important to note that you cannot deduct any expenses paid with those funds from your taxable income.  This can be confusing, and it is best to hire a Sarasota tax planning filing solution attorney to help deal with this and other issues.

“The IRS has taken the position that small businesses that have used a PPP loan to keep paying their employees during the pandemic will not be allowed to deduct the normally deductible ordinary and necessary business expenses of payroll, mortgage or rent payments, and utilities paid with the PPP loan proceeds . The agency’s position is based on the concept of a “double tax benefit,” because the loan proceeds, if forgiven, would not be included in gross income and the business would claim a deduction for the expenses allocated to the forgiven loan proceeds.”

Losses and Net Interest Deduction

Normally, businesses are limited to taking a net operating loss of no more than 80% of their taxable income.  Because so many businesses experienced losses due to the pandemic, this rule was suspended, which hopefully will help some businesses during this tax season.  And these losses in 2020, along with losses from the 2018 and 2019 tax years, can be carried back five years.  

Some businesses are in more debt than ever before because of the pandemic.  In an effort to help businesses deal with this increase in debt, legislation changed the earnings before interest, tax, depreciation, and amortization (EBITDA) from 30% to 50%.  Consequently, for the 2019 and 2020 tax years, businesses can deduct 20% more than the usual amount allowed .

Having a Sarasota tax planning filing solution attorney at your side to advise you, and to give you options for your tax returns this year is necessary.  

Consider reaching out to the Law Offices of Mary E. King for help.  Tax matters can be complicated, and thus, it is always helpful to have someone in your corner who understands the tax law and deals with the IRS on a regular basis.  Indeed, beyond just the normal things businesses deal with every tax year from the IRS, there could be other issues with which a seasoned tax attorney can help.  

So, when it comes to dealing with tax relief and tax litigation, you need to talk to a Sarasota tax planning filing solution attorney who can help.  Mary E. King has spent her career concentrating in tax law and can help you with issues in Florida and elsewhere.  Attorney King has a wealth of information about what types of options would make the most sense for you and your business.

That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax lawyer of Florida , is the first step you should take towards relief.

The Law Office of Mary King P.L. offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses.  Call us today to schedule an initial consultation.  With years of experience as a tax lawyer in Sarasota for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor.  Fill out our online contact form , or call us at 941-906-7585.   Remember, at the Law Office of Mary E. King, we are focused on solving your tax issues for good.

The information in this blog post is provided for informational purposes only and is not intended to be legal advice.  You should not make a decision whether or not to contact an attorney based upon the information in this blog post.  No attorney-client relationship is formed nor should any such relationship be implied.  If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.

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