Deadlines, PPP and EIDL – Oh My!

Extended Deadlines

April 15th was moved to May 17th for individuals ONLY.

For Trusts and Corporations typically due on April 15th no extension was granted.

Keeping with the individual extension – the time to make 2020 contributions to IRAs was also extended until May 17th.

HOWEVER… your 2021 estimated schedule did not get the same love, your first quarter estimate is still due April 15th.

Massachusetts got in line with this change quickly and also extended along the same lines.

Paycheck Protection Program (PPP)

Also receiving attention is our old friend, PPP. When brought back for “second draw” opportunities the original deadline for action was March 31st, with many banks shutting off the spicket well in advance of that date – well, we all know how governmental budgeting works, if there is money left over, you better find a way to spend it – so, with money left in the program, at the 11th hour, the PPP application deadline was extended until May 31st. This provides some unique planning opportunities for those that were late to the party, asleep at the wheel, or are trying to put the pieces together for the ERC/PPP/Grant puzzle. And for those that just received their first draw in early 2021, there may be time yet for a second draw. Don’t miss it this time – I’m not sure how many times we will be able to go back to this well.

We’ve all been waiting to hear what Massachusetts was going to do with the taxability of PPP forgiveness, and we have to wait no more! As we headed out to happy hour this past Friday, Mass put out a much welcomed “e-blast” which excludes forgiven PPP loan amounts from gross income for Massachusetts personal income taxpayers for 2020 (it was already out for Corporations). This is big deal for the ongoing cash flow issues of many small businesses and gets the program back to its original intent and promise – hey if you can’t trust your government to do what it says it’s going to do, who can you trust?

Unemployment Deduction for Taxable Income

As part of the American Rescue Plan enacted on March 11, 2021, a deduction from income will be allowed for up to $10,200 – per individual – from unemployment income received, IF, the tax returns MAGI (modified adjusted gross income) is less than $150,000 (exclusive of unemployment income… it gets very circular). The $150,000 mark is do-or-die… $149,999 and you get the deduction, $150,001 and you do not!

States are now wrestling with this and Massachusetts came up with their own approach. Same possible deduction, but it only applies to taxpayers with household income of not more than 200% of the federal poverty level.

See chart below for income limits based on 200% of the federal poverty level.

# Persons in the Family/Household200% of the Federal Poverty Level
1$25,520
2$34, 480
3$43,440
4$52,400

**Add $8,960 for each additional person in your household.

COVID-19 Targeted EIDL Advance Application

Some of you may be receiving an email about this.

Basically… if your business didn’t receive the full $10,000 – here is another bite at the apple.

Businesses eligible for the Targeted EIDL Advance must meet ALL the following eligibility criteria:

  • Located in a low-income community, as defined in section 45D(e) of the Internal Revenue Code. The SBA will map your business address to determine if you are in a low-income community when you submit your Targeted EIDL Advance application.
  • Suffered economic loss greater than 30 percent, as demonstrated by an 8-week period beginning on March 2, 2020, or later, compared to the previous year. You will be required to provide the total amount of monthly gross receipts from January 2019 to the current month-to-date.
  • Must have 300 or fewer employees. Business entities normally eligible for the EIDL program are eligible, including sole proprietors, independent contractors, and private, nonprofit organizations.

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