CARES Act and COVID-19 Tax Impact
In response to the COVID-19 pandemic, the U.S. Government has stepped in to provide cash flow and economic incentives to stabilize businesses by providing bank financing and deferral of tax payments.
Here are 5 key provisions to keep in mind:
1)
Cash is King.
Cash and credit is going to freeze up. Businesses need to conserve cash.
Cash is like blood flowing through your veins--if you don't have blood flow you die
.
2)
Renegotiate.
Work with your creditors to renegotiate better terms or to defer payments and cut down on unnecessary expenses.
3)
Corporate and individual taxes are due July 15, 2020
.
-- Expecting a refund?
File now. You don't need to wait until the July 15th deadline.
-- If you owe money,
you can file without payment now--just make sure to send payment by July 15, 2020. No interest or penalty will accrue in the intervening period.
4)
PPP Loans
- If you have received a Payroll Protection Loan, put that money into a separate bank account and use that account to keep track of PPP expenses, primarily payroll, rent and utilities. Remember 75% of your PPP loan must be used for payroll (excluding employer FICA taxes) and NOT more than 25% of the loan can be used for rent and utilities.
5)
PPP Forgiveness.
As the old saying goes,
"there is no such thing as a free lunch." In order for the loan to be "forgiven" you must heed the following conditions:
a)
75% or more of the loan must be used for payroll and NOT MORE than 25% for rent and utilities.
b)
Funds must be used within 8 weeks of receiving the loan.
Remember:
FORGIVENESS is taxable as income. You cannot claim PPP expenses on your tax return because that would be "double dipping."
Don’t wait until the last minute for assistance with these new programs or 2019 filing!
(203) 956-4899
|
(203) 291-9093
cecil@nazarethcpas.com
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Reminders for Tax Season 2019:
1) Determine which federal stimulus loan program is best for you and your business.
2) Gather and organize tax documents for 2019
.
3)
Upload tax documents to the portal
. Open a new folder “
2019 tax documents.”
Please don't try to visit our offices until "stay at home" provisions are lifted.
4)
Federal filing deadline extended to July 15, 2020.
- Check with your state authorities for state income tax filing deadlines.
- Don't wait until deadline if expecting a refund!
5) Security - Phone scams. NEVER
respond to phone calls or emails from the IRS. The IRS will only send you written communication by postal mail. Never email documents containing your Social Security numbers.
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Why You Want an Independent Review of Your Organization’s Financial Statements
Banks, lenders, acquirers and auditors look more favorably at your financials
if they’re independently reviewed or audited
and you’ll likely receive better rates and terms.
Contact us for assistance with your personal and business financial statements.
We offer three levels of service:
1)
Compilation.
Simple compilation of financial statements.
2)
Review
.
More analytical procedures performed.
3)
Audit.
More extensive procedures to attest to financial statements. Audit is a higher level of service beyond review and compilation
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