The Planner is CORE Group's blog and a way to help others interested in up to date tax service news.
Congress is keeping the printing presses rolling. This is a summary of the American Rescue Plan Act of 2021 (Act) and its impact on small business owners. We will update with more detail after the IRS has had a chance to promulgate their rules, so stay tuned!
We will not mince words here: getting divorced can be a long, drawn-out, and complicated process — both personally and professionally. But since we are not therapists, we will be focusing on how to handle your taxes when both parties have a stake in a small business. Keep reading for advice on future tax implications, retirement accounts, and more from our experts at Core Group.
How is your business taxed?
Many business owners assume that if they have set up a corporation or an LLC that they can automatically be treated as an S-Corporation. Fake news! Any newly created legal entity (e.g. corporation, LLC) can be elected to be taxed as an S-Corporation, but it requires filing the request with the IRS. Failure to do so will default to the tax type normally associated with the type of entity. For a corporation the IRS could default to taxing you as a C-Corporation, for an LLC, the default is to be taxed as a partnership.
Previously, I have written about the new round of PPP Loans and the grants for shuttered venue operators that were in the Consolidated Appropriations Act. The Act also extended and expanded the Employee Retention Credit.
Due to the pandemic, it’s likely that you or someone you know works remotely, at least temporarily. Here are a few factors to keep in mind when filing your taxes, potential problems that may arise, and relief opportunities that may be available to you. When in doubt, our experts at Core Group can help you devise the tax strategy that’s right for you.
Meet Penelope, a fictional, full-time freelancer who offices from her small (but cozy!) home. Since her home office takes up about 25% of her home, she’s been deducting 25% of her maintenance costs as business expenditures for the past five years. But now she’s ready to sell her home. What tax implications can she expect to face? Does the IRS now classify 25% of her profit as business income? Here’s what to expect when selling a home with a home office.
There are more than just PPP loans in the Consolidated Appropriations Act of 2021. Live event operators will eligible for grants up to $10 million, which can be used for eligible expenses. At least $2 billion in grants are set aside for small employers. Small employers are defined as those with not more than 50 full-time employees.
To answer your question, no Congress is not done. In the wee hours of December 21st, they passed the Consolidated Appropriations Act 2021 and included an extension of the popular Paycheck Protection Program (PPP) for 2021.