For many of you, the initial 8-week PPP Covered Period ended, and we?ve received a lot of inquiries about helping submit the forgiveness paperwork to their lenders. Please be patient as there is no rush.
For starters, the Covered Period is now 24 weeks, so everyone is still able to spend money that counts towards the PPP loan forgiveness.? Plus, the loan forgiveness rules remain somewhat fluid and most banks haven?t finalized their forgiveness paperwork and procedures.? Lastly, the government is now considering just forgiving all the PPP loans without anyone completing any paperwork at all.
We?ll continue to monitor this situation very carefully and will keep you posted.
Seems that many high school and college aged kids are incorrectly having federal and state income taxes withheld from their summer job wages.? Please note that a working child will generally owe no federal income taxes unless wages earned exceed $12,400 (in 2020) or investment income exceeds $350 while total income exceeds $1,100.? Most kids, therefore, end up getting back all of the federal and state income taxes withheld during the year by filing a tax return the following winter.
The IRS wants to help parents of working children avoid the headaches and costs of preparing tax returns for their kids who won’t earn enough to be taxed.? All you need to do is have your child write the word “Exempt” below Line 4(c) of new the Form W-4 that is generally completed the first day of employment.? Below is what the IRS states in their instructions to the Form W-4:
Exemption from withholding. You may claim exemption from withholding for 2020 if you meet both of the following conditions: you had no federal income tax liability in 2019 and you expect to have no federal income tax liability in 2020. … To claim exemption from withholding, certify that you meet both of the conditions above by writing ?Exempt? on Form W-4 in the space below Step 4(c). Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps.
Do yourself and your kids a favor by having him or her write the word “Exempt” under Line 4(c) of the W-4 form.? While you’re at it, go to your state’s tax department website and see if your child is exempt from state withholding too. Your working child will have more money to spend sooner (and will hopefully ask you for less of your money during that time) since no federal income taxes will be withheld from their wages.? And you won’t get stuck preparing a 1040-EZ for your child or paying your CPA $125 or more so your kid can get back taxes unnecessarily withheld.?For more info and instructions, please watch our new video at: https://www.youtube.com/watch?v=FUM57dDB_KM&feature=youtu.be.
And While You’re at It, Fund a Roth IRA For Your Kids
Don?t forget that your kids (or you on their behalf) can contribute the lesser of their W2 income or $6k into a Roth IRA for 2020 by 4/15/21.? Roth IRAs offer working children decades of tax-free growth.
File Something on or Before 7/15
If you can’t get your tax returns completed by July 15th, make sure to file for an automatic extension.? Filing something on July 15th is the only way to avoid the Failure to File Penalty equal to five percent per month on any 2019 federal income taxes due as of 7/15/20.? Yes, expect the IRS to charge you $50 per month on every $1,000 of taxes owed as of 7/15 if you don’t file your tax return or extension request by that date.
Filing for an extension is easy.? Simply go online to https://www.irs.gov/payments and make an online payment or submit a Form 4868 to the IRS along with a check made out to the United States Treasury for an estimate of the taxes you might owe, if anything.? Even if you’re confident you’ll be getting a refund, it’s still a smart idea to file for an automatic extension.
By submitting an extension request (Form 4868) prior to the tax return due date, the Failure to File penalty of five percent per month is replaced with a much more reasonable Failure to Pay penalty of one-half percent per month.? That’s a pretty good return on your $.55 investment for the stamp used to mail the one-page automatic extension request, Form 4868, to the IRS.
Plus, if you end up owing the IRS no more than the greater of 10% of your total federal tax liability or $1,000, you should not be assessed any penalties at all, as long as you file your federal tax return by October 15th.? In this case, you’ll only owe interest to the IRS at today?s very low rate on your balance due as of 7/15/20.
And While You’re At It, Fund Your IRAs
When it comes to your IRAs this year, the deadline to put away money for 2019 is July 15, 2020, even if you file an extension.? This deadline applies for traditional IRAs and Roth IRAs.
For 2019, you can contribute up to $6,000 into an IRA.? Anyone 50 or older as of December 31, 2019 can put away an extra $1,000.? If you’re married, both spouses can contribute to an IRA provided one spouse has earned income during the year in excess of the total combined amount to be contributed.
One great reason to contribute to a traditional IRA each year is to take advantage of the rule allowing all taxpayers to convert their IRAs to a Roth IRA regardless of their income.? Remember, there is a relatively modest income limitation for Roth contributions.? If your 2019 AGI exceeds $137k if single or $203k if married, you aren’t allowed to contribute any money directly into a Roth IRA. However, there is no income limit for people who first contribute to a traditional IRA and then convert that money to a Roth IRA. This strategy is commonly called the Backdoor Roth.
Fund Your HSAs By 7/15 Too:
Health Savings Accounts are the only investment vehicle we?re aware of that offers the winning combination of tax-deductible contributions and tax-free distributions. Individuals with a qualifying high-deductible health insurance plan in place during 2019 were eligible to contribute up to $3,500 into an HSA account for individual plans or $7,000 for family plans.? Anyone 55 or older by 12/31/19 could add an additional $1,000 to their HSAs.
HSAs are funded by your employer, through payroll withholdings at work, or by personally contributing directly into your account.? You have until 7/15/20 to top off your HSA for 2019 if you haven?t already done so, even if you file for an extension.
For more info on HSAs, please check out our recorded webinar available at: https://www.youtube.com/watch?v=prYRhsR9JT0&feature=youtu.be.?? ??????
Buy Three Months to Fund Your Self-Employed Retirement Account
Are you self-employed?? If so, filing an extension might make a lot of sense since it buys you an additional three months to establish and fund your SEP IRA for 2020.? It’s not uncommon for self-employed individuals to pay all of their taxes due with an extension, and then fund their SEP IRA, SIMPLE IRA, or Solo 401k, as well as submit their tax forms, by October 15th.
ADA Announces New Stimulus Opportunity For Dentists
According to the ADA on July 10th at: https://www.ada.org/en/publications/ada-news/2020-archive/july/hhs-opens-provider-relief-fund-to-dentists:
HHS opens Provider Relief Fund to dentists
July 10, 2020 By Mary Beth Versaci
Dentists who were previously ineligible for relief can now apply to receive funding from the U.S. Department of Health and Human Services’ Provider Relief Fund. The American Dental Association worked closely with HHS and the Health Resources and Services Administration, which administers the fund, to implement this for dentists. As a result of this advocacy, eligible dentists will receive a reimbursement of 2% of their annual reported patient revenue.
Dentists have until July 24 to apply for funding through the Enhanced Provider Relief Fund Payment Portal. The fund already was open to Medicaid and Children’s Health Insurance Program dental providers.
“The ADA Council on Government Affairs was proud to advocate for this important funding that will provide badly needed relief to dentists during the pandemic. We thank HHS for their support,” said Dr. Phillip Fijal, council chair.
We have had at least one client who started the application process. Doesn?t seem too bad.? To apply you will need to know the EIN for your practice, the NPI for your practice (which you can look up at this NPI Lookup site:? https://www.npinumberlookup.org/), and other info that you can easily look up and/or is available as part of the results from the NPI Lookup search.? You can probably handle this online application on your own.? We can gladly help you out with this, but our fee to do so will be $500 per application.
A client shared this warning: ?from a poster I usually like .
…Beware/Read before you sign! Email wording suggests it was for Chip and Medicaid providers, but is now available to everyone. There?s at least 10 pages of fine print terms and conditions. Admittedly I have not read through it fully. My concern is that the gov?t is accepting providers into the Medicaid and CHIP programs and retroactively paying you out 2% of previous year?s gross collections? Sounds like a sign-on bonus. Be careful you don?t sign up for a commitment you didn?t intend to. If it really is a payment to ALL dental providers harmed by Covid shutdowns, regardless of participation with government programs, then that would be truly amazing.?
If anyone finds out anything definitive regarding this Relief Fund opportunity for dentists, please email email@example.com or post what you learned on the applicable Message Board at: https://www.schwartzaccountants.com/covid19resources/.
With almost $130 Billion in PPP funds still available for business owners, the Senate and House both passed bills extending the 6/30 due date to apply for this forgivable loan to 8/8.? Assuming President Trump signs this bill into law, please consider applying for a PPP loan for your practice soon if you haven?t already done so.
The PPP Loan Application is relatively simple to complete and is available at:
More info on this is available from the American Institute of Certified Public Accountants (AICPA) at:
According to the IRS in: IR-2020-131, June 26, 2020
WASHINGTON???As the 2019 tax filing and payment deadline approaches, the IRS reminds taxpayers and businesses that 2019 income tax liabilities as well as postponed April 15 and June 15, 2020 estimated tax payments are due July 15, 2020. This postponement provided temporary tax relief in response to the COVID 19 pandemic.
Taxpayers who owe a 2019 income tax liability, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020: One for their 2019 income tax liability and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment.
A list of forms due July 15 is on the?Coronavirus Tax Relief: Filing and Payment Deadlines?page.?Electronic payment options?are the optimal way to make a tax payment.
- Individuals???Taxpayers can use?Direct Pay for two payments each day. Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. They will receive an email confirmation of their payments.
- Businesses???For businesses or those making large payments, the best payment option is the?Electronic Federal Tax Payment System, which allows up to five payments per day. Enrollment is required. Taxpayers can schedule payments up to 365 days in advance and opt in to receive email notifications about their payments. Visit?gov/eftps for details.
Paying by check, money order or cashier’s check:
- 2019 Tax Liability?? If paying a 2019 income tax liability without an accompanying 2019 tax return, taxpayers paying by check, money order or cashier’s check should include?Form 1040-V, Payment Voucher with the payment.
- For those paying when filing their 2019 income tax return, do not staple or paperclip the payment to the return. For more information, go to?Pay by Check or Money Order on IRS.gov.
- 2020 Estimated Tax Payments -?Taxpayers making their 2020 estimated tax payment by check, money order or cashier’s check should include the appropriate?Form 1040-ES payment voucher. Indicate on the check memo line that this is a 2020 estimated tax payment.?
Additional electronic payment options:
Payment options are available at?IRS.gov/payments:
- Taxpayers can pay when they file electronically using tax software online. If using a tax preparer, ask the preparer to make the tax payment through an?electronic funds withdrawal from a bank account.?
- Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a?payment processor. Processing fees apply. No part of the card service fee goes to the IRS.
- The?IRS2Go app provides mobile-friendly payment options, including Direct Pay and Payment Provider payments on mobile devices.
For taxpayers paying separately from when they file their tax return, the more secure and quicker way to send a payment to the IRS is by going to?IRS.gov/payments?and choosing an electronic payment option to submit the payment. Taxpayers should continue to use electronic options to support social distancing and speed the processing of tax returns, refunds and payments.
Reviewing federal tax information online
Individual taxpayers can go to?IRS.gov/account?to securely access information about their federal tax account. They can view the amount they owe, access their tax records online, review their payment history and view key tax return information for the most recent tax return as originally filed.