Dasta & Company CPA

The Internal Revenue Service (IRS) has announced that tax season will open on Friday, February 12, 2021. Yes, on a Friday. The IRS will begin accepting paper and electronic tax returns that day. This is about two weeks later than had been expected. The delay allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes - especially those involving a second round of stimulus checks (Economic Impact Payments, or EIPs).

*** ATTENTION Business Owners *** The IRS Has Announced That Expenses Paid With PPP Loan To Be Forgiven Are Non-Deductible In 2020 On November 17th, the IRS issued guidance on how the PPP Loan forgiveness impacts how businesses will deduct expenses paid with the PPP funds. According to the IRS Bulletin at: https://content.govdelivery.com/accounts//bulletins/2acfa3f: Revenue Ruling 2020-27 provides guidance on whether a Paycheck Protection Program (PPP) loan participant that... paid or incurred certain otherwise deductible expenses can deduct those expenses in the taxable year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan. The revenue ruling also provides guidance if, as of the end of the 2020 taxable year, the PPP loan participant has not applied for forgiveness, but intends to apply in the next taxable year. Revenue Ruling 2020-27 available at: https://www.irs.gov/pub/irs-drop/rr-20-27.pdf provides a variety of examples, and comes to this conclusion: HOLDING A taxpayer that received a covered loan guaranteed under the PPP and paid or incurred certain otherwise deductible expenses listed in section 1106(b) of the CARES Act may not deduct those expenses in the taxable year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan on the basis of the expenses it paid or accrued during the covered period, even if the taxpayer has not submitted an application for forgiveness of the covered loan by the end of such taxable year. There is still a chance that Congress will clarify their intent that the PPP should NOT be taxable to small businesses who received these loans. Even so, with the prospect that nothing will happen on this matter until after the President is inaugurated on January 20th, we’re assuming that expenses paid with the PPP loan that will be forgiven will essentially be non-deductible to business owners in 2020.

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Virtual Tax Appointments are always available ! *** Keeping you and your money safe is our top priority. *** NEW CLIENTS receive 20% OFF on your Tax Preparation Fees. Call 412-343-8050 or email [email protected] today.

Virtual Appointments are always available ! Keeping you and your money safe is our top priority. Call Dasta & Company CPA at 412-343-8050 today..