Translations from Your Trusted Advisor.
Yesterday the IRS began depositing the second round of Economic Impact Payments (EIP) to qualifying individuals. Although they should have begun making direct deposits as early as last night they indicated that direct deposits will continue to be processed into next week.
This week the U.S. Senate and House of Representatives passed the second round of COVID relief, the Consolidated Appropriations Act. The legislation provides another round of economic impact payments to individuals as well as additional funding for small businesses. Certain eligible small businesses who received the first wave of the PPP loan may be eligible to apply again. The legislation also opened the applications to non-profits, independent contractors, sole proprietors and the eligible self-employed. Additionally, the most anticipated guidance on the tax treatment of the Paycheck Protection Program (PPP) loan has been made clear.
As we head into year-end there are a lot of questions regarding accounting for the Paycheck Protection Program (PPP) proceeds. There have been many articles and discussions around the tax treatment of PPP but we should also keep in mind the book accounting treatment for PPP proceeds. The Journal of Accountancy published an article about the book treatment back in June which explains some options for the book treatment of PPP proceeds. These options should be considered for both for-profit and not-for-profit organizations.
Now, as year-end approaches, is a good time to think about planning moves that may help lower your tax bill for this year and possibly next. Year-end planning for 2020 takes place during the COVID-19 pandemic, which in addition to its devastating health and mortality impact has widely affected personal and business finances. New tax rules have been enacted to help mitigate the financial impact of the disease, some of which should be considered as part of this years' planning, most notably elimination of required retirement plan distributions, and liberalized charitable deduction rules.
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