Breezy Day Tax Services

04/03/2020

COVID-19 Financial Update for 4-2-2020

Stimulus payments: The stimulus check being sent out is actually an advance of a credit for 2020. They use the info on your 2019 return to determine if you are eligible. If your 2019 return is not available, they will use your 2018 return.

Important note: The threshold for reduction of the payment is $75k for single, and $150k for married filing joint. This is for tax year 2020… If they advance you more than what is due, they are not going to recapture this.

Takeaway: If your 2018 is below the threshold, and your 2019 will be above the threshold, wait to file your 2019 return.

SBA Loans: They have streamlined the loan process now. You can go to SBA website and fill out the streamlined application. It takes about 5 minutes to complete.

Is there a $10k grant (free money) in this loan? Technically yes, but practically no. If you apply for the loan, you can ask for a consideration of up to $10,000 advance. If they deny you a loan, you will not need to repay this advance.

Who should consider this loan: Any business that has taken a financial loss due to COVID-19.

They have waived the application fees, and made the interest rate 3.75% with terms of 5, 15, or 30 years.

PPP Loans (Paycheck Protection Loans): The treasury just released guidance on these loans which will become available tomorrow, April 3, 2020.

How do you get these: You will need to go through a traditional lender that offers these SBA PPP loans.

Is there loan forgiveness? Yes, there is a provision that provides forgiveness up to the full principal amount of qualifying loans.

You need to maintain your workforce and pay them for a period of time after the loan origination date. This is an incentive to maintain your workers.

Who should consider this loan: Small businesses with employees on the payroll who receive W-2’s.

Other notes: In their guidance, the treasury has clarified that independent contractors do NOT count as employees.

Technical Planning Notes: The CARES act also introduced the employee retention credit worth up to $5,000 per employee. You cannot qualify for both the PPP loan forgiveness and the employee retention credit. If you are an employer, you need to figure out which is better for you.

Unemployment for Self Employed: As part of the new law, they have established an unemployment fund for self employed individuals.

Can I apply for this now? Not in Massachusetts - they are still working on the mechanism to get the Unemployment for Self Employed individuals set up.

Paid Sick Leave & Paid Family Leave Tax Credit: There is a new credit established for paid sick leave and paid family leave.

Who is this for: This credit impacts both self employed individuals & businesses and is a credit against payroll tax/self employment tax.

If I am self employed, what do I need to do to claim this credit? You should start tracking the days you are unable to work due to sickness, quarantine, or caring for someone in quarantine.

Note: The rules on this provision are fairly complex and there is no IRS guidance.

03/27/2020

Massachusetts has officially extended the tax deadline to July 15th, 2020 to follow with the federal extension.

This extension is automatic. Taxpayers do not need to file any additional forms to qualify.

03/22/2020

For small business impacted by the COVID-19, the SBA is now accepting applications for economic relief.

I spoke with them on the phone last week, they recommend you apply as soon as this is available and return all documents ASAP.

03/20/2020

IRS has officially announced that it will be delaying tax season. New filing and payment due date is July 15, 2020 for the 2019 tax year.

If you are owed a refund, I encourage you to file now. The IRS is still processing refunds.

If you need help with your taxes, please reach out.

03/18/2020

Corona Virus Financial Update Part 2:

Tax Return Extender:
There was an announcement that the IRS plans to push the tax payment deadline back 90 days. As it was spoken in the press conference, this is for the payment of tax due, not the filing deadline.

As of today, you are still obligated to file a return or extension by April 15th. The payment will not be due for another 90 days.

Important Note: This has not been finalized and we await an official announcement from the IRS. Until we have guidance this is speculation.

Short Term Loans/Relief from MA:
Massachusetts has set up a relief fund for small businesses that need immediate relief from the impact of the Coronavirus.

[Link in the Comments]

This is intended to cover no more than 3 months of demonstrated cash operating expenses for the 1st quarter of 2020.

Long Term SBA Relief:
Charlie Baker has announced that he has officially requested MA to be declared a disaster area so they will qualify for SBA loans. These are low interest loans and can be paid over 5, 15, or 30 years.

This will be a helpful long term solution for those with a substantial disruption. I am awaiting the official federal declaration, until then, these funds are not available.

Bookkeeping/Tax Prep:
To qualify for the short term relief and the SBA loans, you will need to provide verification of income and expenses. This will include prior tax returns and 2019 financial statements.

If you do not have those ready and need assistance, please reach out to me ASAP.

I have extensive experience in both tax prep (Enrolled Agent) and bookkeeping (Quickbooks Online Advanced Certified) and want to make sure that unfiled returns or lack of financial statements do not preclude you from qualifying for these services.

A loan fund of $10 million has been created to provide financial relief to Massachusetts businesses that have been affected by COVID-19. Massachusetts Growth Capital Corporation (MGCC) will receive and process all applications for this fund.

03/15/2020

Financial Update for COVID-19

The Stock Market:
The stock market has been quite turbulent the past few weeks and I expect it to remain so. Panic selling often leads to major losses in your portfolio. This event will pass, and if you have a 15 year plan, make sure you continue on that 15 year plan.

Cashflow:
This emergency has forced most of the business owners to shut their doors and employment to stop. Until some of the other programs set to mitigate this kick in, you may need to dip into emergency funds.

If you have bills you cannot pay, please contact whomever you owe earlier to get on top of it.

SBA Loans:
I have contacted the SBA to find out about SBA loans - these are loans that can help bridge the gap for those who had a business disruption. These are low interest loans (3.75%), and can be for 5, 15, or 30 years.

Anyone who has had a significant business disruption should seriously consider these. They will not be available until they list your area as an affected disaster area.

For my freelancers reading this, this is a very crucial thing to consider. Remember, you as individual freelancers ARE a business. These programs are for you, however, you will need to take the steps enact these.

Mortgage:
The fed just cut its rate to 0%. Now is a great time to refinance. This could save you thousands over the life of your loan.

If you are looking for a lender, Susan Kelly from Fairway Mortgage does a great job.

Susan Number: 413-884-0309
[email protected]

Taxes:
The president announced they will enact tax measures to mitigate the impact of COVID-19, however no specifics have been mentioned. Until details come forward, make sure to file any extensions and pay any applicable taxes.

Student Loan Interest:
It was announced that student loan interest will be waived during this crisis. Again, details are not clear on this, however, you should continue to make your regular student loan payments as normal.

Be Safe,
David Roth