The coronavirus pandemic has shaken the world in unprecedented ways, particularly economically. In order to prevent total economic crumble, the president signed the CARES Act into law on Friday, March 27, 2020. This act set aside $376 billion to help workers and small businesses in the United States keep their jobs and businesses open. These funds were approved for borrowing from the U.S. Small Business Administration in four new programs:
Each loan program has different requirements and terms. As the end of the year nears, many business owners that participated in one of these loan programs are wondering what the tax implications will be. While some of these loans are forgivable, the expenses that are paid for with loan funds are not tax deductible. This means that business owners who accepted a loan could face much higher tax payments than usual. As the pandemic has continued, additional orders were signed that have impacted payroll taxes and more.
Understanding all of these implications as you prepare your taxes for this year can be overwhelming. Paramount Tax Services of Washington is here to help. Our team of professional tax preparers in Washington works closely with EAs to ensure the most accurate understanding of tax code and annual implications. We can help you understand how any COVID-19 relief funds will impact your taxes and prepare an accurate return. Additionally, we will ensure you are taking every possible deductible to minimize your total amount owed. Every penny counts, especially in a time of economic hardship. The Paramount Tax team is here to help you!
As the tumultuous year of 2020 comes to an end, many small business owners are left wondering what their tax returns will look like. The unpredictable economic damage caused by the COVID-19 led to the passing of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Through the Paycheck Protection Program, or PPP, this act allotted up to $349 billion in forgivable loans to small businesses for payroll assistance and certain other expenses. If your business applied for a PPP loan, you may be wondering about the tax implications. While loan forgiveness was promised for PPP loans (if at least 60% was used to cover payroll), expenses paid with forgiven PPP loan proceeds are not deductible. That means that expenses that are typically deductible, like utilities and rent, will not be deductible if you used the loan funds to cover them.
PPP loan forgiveness is possible if loan proceeds were used to cover the following expenses:
If you are trying to manage PPP loan expenses as you prepare your taxes, Paramount Tax is the accounant in Washington that you can rely on.
Economic shocks are hard to navigate and the implications of this past year are no different. Trying to understand how the PPP loan will affect your taxes is much more difficult on your own. Our talented team of professionals and tax preparers are here to help. Taxes are already overwhelming; you can expect this year’s filing to be doubly frustrating. With help from our expert tax preparers, however, you can rest assured that your taxes will be filed accurately.
Maximize your deductions and reduce your liabilities. Schedule with Paramount Tax & Accounting DC Metro Center today
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Whether you are filing personal taxes or you own a business, if you are not already using a professional tax and accounting firm, you have most likely already missed out on major tax benefits, deductions and credits. This is because a professional tax and accounting firm utilizes licensed professionals, who can not only advise individuals on personal financial matters but who are qualified to advise businesses, financial institutions, nonprofit organizations and government agencies on a wide range of financial topics. Our strict standards ensure that we understand the complicated tax laws and how to implement strategies that return the most benefits to individuals and businesses. Give Paramount Tax & Accounting DC Metro Center a call or visit our tax and accounting firm in Washington for a free consultation.
