We want to take this moment to update you on a few new rulings our friends at the IRS have implemented.
First, please note that any funds forgiven from your PPP loans will be treated as taxable income. Yes, I am saying this correctly.
As if the pandemic isn’t enough to bear, now you have to realize those PPP funds you have received will be deemed taxable income,if they are forgiven by the SBA. Now for some of us that are racking up the losses this year, it’s not that big of a deal. But for others that are now turning the corner to profitability, please keep this in mind. We at Interactive Accountants are factoring this into your 2020 estimated taxes.
Second, President Trump recently enacted a payroll tax deferral that allows employers to defer to 2021, the fourth quarter 2020 social security and medicare (aka FICA) deductions that employees would normally have been deducted from their paychecks. Essentially putting a little more money in employees checks in Q4 2020, but then having it to be repaid Q1 2021. The IRS has made it clear that if you opt in to this program, the repayment responsibility of those FICA taxes will fall on the employer. This means it’s up to you to make sure your employee repays this amount. The kicker here is that if the employee quits and repayment isn’t completely made, it’s now our responsibility as employers to pay it back for them….then chase the former employee for those funds. The good news is that employers have an option to not participate in this plan, the bad news is we may be seen as the “bad guy” if we don’t offer it to employees that want it. At least we have a choice here!
If you’d like to discuss these two new IRS rulings with us, feel free to reach out. And don’t forget about our referral program we recently rolled out. We greatly appreciate all your referrals!
As always, it is a pleasure to be of service to you and we thank you for your business!