by Robert DeHollander
As we approach the end of 2020, it’s a great time to review strategies to manage your tax liability for 2020. COVID-19 has thrown a few wrinkles into year-end tax planning this year. Here are a few tips to consider. Review these tax strategies with your tax professional to see if they apply to your business.
1. Address your PPP loan forgiveness
If you applied for a PPP loan, the SBA has issued updated guidance on the forgiveness process. You may select a period of either 8 or 24 weeks for your PPP funds (the “covered period”). You typically submit your application any time after your covered period ends, or prior to the end of the covered period if the loan funds for which you are seeking forgiveness have been expended. Visit SBA.gov to access all the information they’ve made available to PPP borrowers.
2. Accelerate AMT refunds. The Tax Cuts and Jobs Act (TCJA) repealed the corporate alternative minimum tax (AMT), which allowed corporations to claim all their unused AMT credits in the tax years beginning in 2018, 2019, 2020 and 2021. Due to the COVID-19 pandemic, the CARES Act accelerated this timeline.
3. Use current losses for quick refunds. Did you suffer business losses this year? The CARES Act resurrected a provision allowing businesses to use current losses against past income for immediate refunds. Net operating losses (NOLs) arising in tax years beginning in 2018, 2019 and 2020 can be carried back five years for refunds against prior taxes.
4. Review the timing of your payroll tax deduction. The CARES Act allows employers to defer paying their 6.2% share of Social Security taxes for the rest of 2020. Under the Act, half of the amount is due by Dec. 31, 2021, with the other half due by Dec. 31, 2022. This provides a great liquidity benefit, but business owners should consider the impact on deductions before the end of the year. For most businesses, the value of deferring the actual payment may also be worth deferring the deduction.
Robert DeHollander, CFP
3515 Pelham Road, Suite 100, Greenville, SC, 29615. Ph: 864-770-0220
Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a Registered Investment Adviser.
The post Provided: 2020 year-end tax strategies for business owners appeared first on UPSTATE BUSINESS JOURNAL.
Upstate News Headlines
- Weekend Things to Do: Greenville South Carolina
- New Entertainment District could be coming to Greenville's west end
- The Latest: India vaccinates 2 million health workers
- 'Give her to us': Victoria Smith's biological family makes plea
- Harvey Guillén Breaks Down His Zoey's Playlist Departure, Teases What We Do in the Shadows Season 3
- Even with coronavirus vaccine distribution set to increase, upcoming months could be rough
- Greenville County Schools call on lawmakers to approve funds for teacher step increases
- Senior Bowl a chance to evaluate, but also develop
- A crocheted Bernie Sanders doll raised more than $40K for charity in an online auction
- Democrats prep President Biden's COVID-19 aid package with or without GOP
- Let down your hair: Army unveils new rules for ponytails, nail color