TAX SEASON: PANDEMIC TAX PLANNING: Small Businesses: Be Aware of Important Updates and Tips for this Year’s 2020 COVID-19 Pandemic Tax Returns
Small Businesses: Be Aware of Important Updates and Tips for this Year’s 2020 COVID-19 Pandemic Tax Returns
Updates and Tips for Small Businesses this Tax Season, Including PPP Loan Forgiveness, Taxation and Expense Deductions
2020 COVID-19 Pandemic Tax Returns
As the American small business community prepares to file their 2021 tax returns amid the devastating coronavirus pandemic, Keith Hall, the president and CEO of the National Association for the Self-Employed (NASE), the nation’s leading advocate and resource for the self-employed and micro-businesses, today released a list of updates and tips for filing returns this year reminding small employers that “PPP loans up to $150,000 will be forgiven and will not be counted as taxable income.”
“The great news for small businesses who received PPP loans under $150,000 is that those funds are eligible for forgiveness and will not be counted as taxable income on upcoming year-end returns. Furthermore, any business expenses paid with your PPP loan are also deductible.
“For small businesses who received loans more than $150,000 or individuals who received a stimulus check in 2020, it is important to review the tax obligations around any repayment or impact that will have on tax returns.
“While the tax filing process is already challenging for the small business community, it should not be any more difficult and should not require any more paperwork than It has in years past.
“As the pandemic continues to impact the small business community, it is important for all small business owners to prepare now for filing their 2021 tax returns. Now is the time to gather documents, review updates and tax obligations to the tax code with the goal of making filing returns simpler, more efficient and beneficial to their bottom lines.”
Tax Filing Key Updates & Reminders
- The tax return filing date is Thursday, April 15th, 2021.
- Under the Payroll Protection Program:
- All loans of $150,000 and under will be forgiven.
- All loans of $150,000 and under will not be considered taxable income.
- Expenses paid with your PPP loan are deductible.
- Paying business taxes with PPP funds is not allowed.
- As part of the tax system:
- A lower individual rate, which is where most self-employed small businesses file.
- A doubling of the standard deduction, which is $12,400 for single filers and $24,800 for married couples.
- Reduction or elimination of specific deductions such as for moving expenses or the unlimited state and local tax deductions known as SALT deductions, which are now capped at $10,000.
- A streamlined, standard home office deduction is available.
- The standard mileage rate for business use of an automobile is 56 cents per mile for 2021 tax returns, down from 57.5 cents last year.
- Limits for retirement plan contributions such as SEPs, IRAs and 401(k) plans may have changed for your situation.
“Don’t forget about hidden or overlooked deductions – apply everything that can make a difference from mileage reimbursement, retirement contributions and the home office deduction. Remember, you are not alone and there are resources out there for help, including NASE.org, IRS.gov and SBA.gov, where information and assistance are readily available,” concluded Hall.
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What Is the National Association for the Self-Employed (NASE)?
The National Association for the Self-Employed (NASE) is the nation’s leading advocate and resource for the self-employed and micro-businesses, offering a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy.
The NASE Next Biz Thing helps identify and connect our nation’s smallest businesses. Need small business help? Check out NASE’s Ask the Experts for advice or the NASE Minute for small business support.
The NASE is a 501(c) (6) nonprofit organization and provides big-business advantages to hundreds of thousands of micro-businesses across the United States. For more information, visit the association’s website at NASE.org