As we posted last month, the HHS announced that additional Provider Relief Funds are available to healthcare professionals. You can read that post at: https://schwartzaccountants.com/2020/10/hhs-announces-additional-provider-relief-funds-application-due-11-6/.
Phase-3 has been expanded to include previously ineligible providers including behavioral health practitioners and also those healthcare providers that began practicing during the first quarter of 2020.
The deadline to file the online application is Friday November 6th. This is a great opportunity for eligible practices that haven’t submitted for this subsidy yet and should now receive a taxable grant equal to 2% of their 2019 patient revenue. To file, please first download a copy of your 2019 tax return that reflects your practice income. Next, generate two quarterly Profit and Loss reports either from your QuickBooks or using Excel – one for the first two quarters of 2019 and a second for the first two quarters of 2020. As part of competing the online application, you’ll upload PDFs of your tax return and both P&L reports.
More info is available at https://www.hhs.gov/sites/default/files/provider-distribution-instructions.pdf and https://www.hhs.gov/sites/default/files/terms-and-conditions-phase-3-general-distribution-relief-fund.pdf?language=en. As always, feel free to submit this online application on your own. Or we can submit the application on your behalf for a fee of $500 per application filed.
Please remember that according to the HHS at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/reporting-auditing/index.html, “All recipients of more than $10,000 of Provider Relief Fund (PRF) payments are required to comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary.”
Required reporting includes lost revenues and/or expenses attributable to coronavirus, as well as other assistance and subsidies received during 2020.
- January 15, 2021: reporting system opens for providers
- February 15, 2021: first reporting deadline for all providers on use of funds
- July 31, 2021: final reporting deadline for providers who did not fully expend PRF funds prior to December 31, 2020
For more info about the HHS Provider Relief Fund subsidies, please view the summary of reporting guidelines for payments exceeding $10,000 – PDF or the Final Reporting Data Elements – PDF.
According to information available at: https://www.empoweringsmallbusiness.org/covid-19-response/covid-19-grants-massachusetts-small-businesses , the Commonwealth of Massachusetts has made $50.8 million in grants available to support small businesses, microenterprises, and their employees, families and communities. Massachusetts Growth Capital Corporation (MGCC) will be administering these funds to businesses experiencing economic hardship and a loss of income due to the COVID-19 pandemic.
No one is sure how much of this grant most dentists can expect to receive based on the following:
Grant funding is intended to help businesses adversely impacted by the pandemic. Preference will be given to small businesses whose owners are women, minorities, veterans, members of other underrepresented groups, who are focused on serving the Gateway Cities of Massachusetts, and those most negatively impacted by the COVID-19 pandemic. Preference will also be given to applicants that have not been able to receive aid from other federal programs related to COVID-19.
Gateway Cities: Wondering which cities are Gateway Cities? According to MassInc at: https://massinc.org/our-work/policy-center/gateway-cities/about-the-gateway-cities/:
Gateway Cities are midsize urban centers that anchor regional economies around the state. For generations, these communities were home to industry that offered residents good jobs and a “gateway” to the American Dream. Over the past several decades, manufacturing jobs slowly disappeared. Lacking resources and capacity to rebuild and reposition, Gateway Cities have been slow to draw new economy investment.
The Legislature defines 26 Gateway Cities in the Commonwealth, which are Attleboro, Barnstable, Brockton, Chelsea, Chicopee, Everett, Fall River, Fitchburg, Haverhill, Holyoke, Lawrence, Leominster, Lowell, Lynn, Malden, Methuen, New Bedford, Peabody, Pittsfield, Quincy, Revere, Salem, Springfield, Taunton, Westfield, and Worcester.
The program offers two types of grants – one of which is for businesses with 50 or fewer employees. For this grant, businesses can receive up to $75,000 but capped at up to 3 months of operating expenses, as evidenced by your business’ 2019 Federal Tax Returns. Grant amounts will be considered for actual expenses for 2020 during the pandemic. The funds can be used for employee payroll and benefit costs, mortgage interest, rent, utilities and interest on other debt obligations.
More info is available at: https://schwartzaccountants.com/2020/10/massachusetts-announces-covid-19-grants-for-small-businesses/, or apply at: https://massgcc3.submittable.com/submit/177585/small-business-grants-for-50-or-fewer-employees. As always, feel free to submit this online application on your own. Or we can submit the application on your behalf for a fee of $500 per application filed.
Last month, the IRS announced the cost of living adjustments applicable to the various retirement plan limitations for 2021. Unfortunately, the bulk of the retirement savings limits don’t increase from 2020 levels.
Many practice owners set up a 401k plan as their office retirement plan. Amounts contributed to these plans generally reduce your taxable earnings and always grow tax deferred. Like 2020, you can contribute up to $19,500 into a 401(k) plan through salary deferrals in 2021.
Anyone 50 or older by December 31, 2021 can contribute an extra $6,500 into their 401(k) plan through salary deferrals next year, for a total annual contribution of $26,000. That is the same as what was allowed for 2020. Please note that you don’t need to actually wait until your 50th birthday to be able to start making these catch-up contributions, so adjust your deferrals as of the first paycheck of that monumental year.
Many smaller practices chose to set up a SIMPLE/IRA instead. SIMPLE’s work just like 401(k) plans, which means it’s up to you and each staff member to fund the bulk of this retirement savings account through salary deferrals. For 2021, the maximum contribution into your SIMPLE as salary deferrals remains at $13,500. Anyone 50 or older by December 31st can add an additional $3,000 in 2021, for a total annual salary deferral of $16,500, unchanged from 2020. Your practice will generally make matching contributions into each participant’s account of up to 3% of gross salary.
And if you are self-employed without staff who have worked for you for more than three years, you can contribute up to 20% of your net self-employment income into a SEP IRA. The maximum contribution into your SEP IRA for 2021 increases by $1,000 from 2020 to $58,000. Solo 401k’s allow self-employed individuals without staff (besides your spouse ) who work for you for more than 1,000 hours per year to hit the $58k max on less income and also increases the max to $64.5k for people 50 and over.
Increase to IRAs
Don’t forget about IRA’s. Even if you’re covered under a retirement plan through your practice, you and your spouse can each contribute up to $6,000 into a traditional IRA or Roth IRA (subject to income limitations) next year, as long as your combined wages and net self-employment income exceeds the total amount contributed. Anyone 50 or older can contribute an extra $1,000, increasing the total allowable contribution to $7,000. And don’t forget to contribute to a Roth for your kids who work at your practice. You have until April 15, 2021 to contribute to your IRAs for 2020.
There is a bit of good news for people looking to contribute to a Roth IRA in 2021. The amount you can earn and still contribute to a Roth did increase by $1,000 for single individuals and $2,000 for joint filers as follows:
- Single Individuals – Phase-out begins $125,000 and ends at $140,000
- Married Couples – Phase-out begins $198,000 and ends at $208,000
If your income is too high for a Roth, don’t forget that there is no income limitation for people looking to convert their IRAs to a Roth IRA, providing high-income taxpayers with a great opportunity to get money into these tax-free investment accounts using a strategy known as the “back-door Roth”.
And finally, if you’re married and your spouse isn’t covered under either an employer sponsored or self-employed retirement plan during the year, the phase-out range for your spouse making a deductible IRA contribution has increased to $198,000 – $208,000 for 2020, which is identical to the Roth IRA phase-out limits.
Re-Set Your 2021 Retirement Savings Budget
Most people won’t be able to max out these tax-advantaged retirement options unless they get on a budget and put away a set amount of money each month. With 2020 winding down, now’s the time to start thinking about resetting your monthly retirement savings goals for 2021.
It’s a sad state of affairs in our country when scammers are preying on each state’s unemployment funds. We first posted info on this big problem a few months ago at: https://www.schwartzaccountants.com/2020/06/ma-is-now-being-inundated-with-fraudulent-unemployment-claims/. Beyond notifying your state unemployment department immediately upon learning that a fraudulent unemployment claim was filed under your name, here are some additional prudent steps to take:
- Start by changing the passwords for your various bank and credit cards accounts
- Next, put a credit freeze on through the 3 credit agencies listed below. This will prevent new accounts from being opened in your name. Please note that freezing your credit can be a bit of an annoyance later. For instance, should YOU wish to open a valid account, you will likely need to go online and pause each credit freeze.
- And consider an identity theft protection subscription like Lifelock (lifelock.com). There are several programs that monitor your credit. In fact, AAA members get free credit monitoring as part of their membership.
Please be aware of a recent scam involving people impersonating the Small Business Association. The imposters claim to be conducting “site visits” on behalf of the SBA. When contacted, the SBA states that they do not conduct site visits.
- SBA does not initiate contact on either 7a or Disaster loans or grants. If you are proactively contacted by someone claiming to be from the SBA, suspect fraud.
Additional scams involving the SBA and loans have sprung up since the COVID-19 Relief Act. You can read about other scams at:
Q: I have an assistant who has two small kids and has not been coming to the office since she does not have babysitting. She wants to know if she is eligible to still be paid by my office and, if so, how do we go about paying her and do we get a tax credit on the wages paid?
A: According to our firm’s payroll manager Greta:
In this case, your employee may be eligible for two-thirds of her pay for 12 weeks capped at $200 per day and $12,000 in the aggregate. If paid, the company would receive a dollar for dollar tax credit against their federal Payroll Taxes. However, your practice appears to be eligible for the small business exemption since you have fewer than 50 employees, possibly relieving you from this portion of the emergency paid Sick/Leave Act FFCRA.
A small business can be exempt from certain paid sick leave and expanded family and medical leave responsibilities if providing an employee such leave would jeopardize the viability of the business as a going concern as long as the:
1. employer employs fewer than 50 employees;
2. and the leave is requested because the child’s school or place of care is closed, or childcare provider is unavailable, due to COVID-19 related reasons; and an authorized officer of the business has determined that at least one of the following three conditions is satisfied:
a. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
b. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
c. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
If you determine you qualify for this exemption, then to elect this small business exemption simply document why your business with fewer than 50 employees meets the criteria and keep that documentation on file in your office. Otherwise, please abide by the regulations of the FFCRA available at: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave#_ftn6 , pay your employee to stay home and take a tax credit against payroll taxes submitted each pay period.
According to the HHS at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/reporting-auditing/index.html:
“All recipients of more than $10,000 of Provider Relief Fund (PRF) payments are required to comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary.”
Required reporting includes lost revenues and/or expenses attributable to coronavirus, as well as other assistance and subsidies received during 2020.
• January 15, 2021: reporting system opens for providers
• February 15, 2021: first reporting deadline for all providers on use of funds
• July 31, 2021: final reporting deadline for providers who did not fully expend PRF funds prior to December 31, 2020
View the summary of reporting guidelines for payments exceeding $10,000 – PDF. Or Download the Final Reporting Data Elements – PDF. This document updates and supplements the July 20, 2020 Post-Payment Notice of Reporting Requirements.
The SBA recently issued Form 3508S (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf) which greatly simplifies the loan forgiveness application for practices that received PPP Loans of less than $50k.
If you complete the forfeiture calculation simplify Initial the box next to each of the 7 questions, including the first question that asks the practice owner to confirm:
• The dollar amount for which forgiveness is requested does not exceed the principal amount of the PPP loan and:
– was used to pay costs that are eligible for forgiveness (payroll costs to retain employees; business mortgage interest payments; business rent or lease payments; or business utility payments);
– includes payroll costs equal to at least 60% of the forgiveness amount;
– if a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual; and
– if the Borrower has elected an 8-week Covered Period, does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.
According to the instructions available at: https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S-Instructions.pdf, practice owners with PPP loans of less than $50k still need to submit additional paperwork with their lenders including:
Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
1. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
2. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
a. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
b. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
3. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.
Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
1. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
2. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
3. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments
Practices with loans of less than $50k might as well reach out to their lender about submitting a Form 3508-S along with the applicable supporting documentation to have your loan forgiven as long as the full amount of the PPP loan was spent on qualifying payroll and facility costs. More info is available at: https://home.treasury.gov/news/press-releases/sm1148.
Last week, the U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced $20 billion in new funding for providers on the frontlines of the coronavirus pandemic. Most healthcare practice owners should be eligible for Phase-3 as follows:
• Providers who previously received, rejected or accepted a General Distribution Provider Relief Fund payment are invited to apply for additional funding that considers financial losses and changes in operating expenses caused by the coronavirus. Providers that have already received payments of approximately 2% of annual revenue from patient care may submit more information to become eligible for an additional subsidy.
• An expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic are now eligible for relief payments. Working with the Substance Abuse and Mental Health Services Administration (SAMHSA), HRSA developed a list of the nation’s behavioral health providers now eligible for funding, which includes, for example, addiction counseling centers, mental health counselors, and psychiatrists.
• Previously ineligible providers, such as healthcare practices that began practicing in 2020, are also invited to apply, including Medicare, Medicaid, CHIP, dentists, assisted living facilities and behavioral health providers that began practicing January 1, 2020 through March 31, 2020.
Learn more by reading the HHS Press Release on the New Phase 3 Provider Relief Funding at:
HHS has issued Instructions for this Phase-3 subsidy available at: https://www.hhs.gov/sites/default/files/provider-distribution-instructions.pdf.
Additional info on the program is available at:
To complete the application on your own, go to https://cares.linkhealth.com/dashboard/#/ and use the login credentials set up when you applied for the initial subsidy of 2% of your 2019 practice collections.
Practice owners who received the PPP loan earlier this year had 24 weeks to spend the funds on certain payroll and facility expenses to qualify for full forgiveness of that loan. For many of our clients, the 24-week Covered Period has recently ended.
Did you know that you have 10 months following the end of the Covered Period to file the paperwork with your lender to apply for full forgiveness of the PPP loan? We are generally recommending that our clients do NOT rush to complete the loan forgiveness paperwork. Believe it or not, the PPP loan forgiveness rules are still fluid as follows:
1. The SBA is considering waving the requirement for businesses that borrowed less than $150k in PPP funds to file any type of forgiveness application with their lender.
2. Perhaps the EIDL grant will also be forgiven for businesses that borrowed less than $150k. Currently, you?re required to repay that grant of $1k per employee received last spring as part of the PPP Loan forgiveness process.
We have prepared the PPP loan forgiveness application for a few clients so far and have found the paperwork to be extremely labor intensive. For that reason, we will charge our clients who request our assistance with their application the following:
? If we provide both accounting and payroll services to your practice $ 750
? If we provide accounting services but not payroll services $1,500
? If we don?t provide accounting or payroll services to your practice $2,500
Since the rules are fluid, you still have 10 months before the paperwork is due, and there is a decent chance that no paperwork will ultimately be required, why rush to start the PPP Loan forgiveness paperwork at this time?