Kutchins, Robbins & Diamond, Ltd. Certified Public Accountants and Advisors

Mid-Year Tax Tips for Your Business

Businesses all over the country have been affected by the COVID-19 pandemic. Many are facing extreme financial pressure. Fortunately, there are tax breaks that can provide businesses with much needed relief.

The Employee Retention Credit

This credit is a fully refundable tax credit for employers equal to 50% of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000.

Who is an Eligible Employer?

Eligible Employers for the purposes of the Employee Retention Credit are employers
that carry on a trade or business during calendar year 2020, including tax-exempt
organizations, that either:

• Fully or partially suspend operation during any calendar quarter in 2020 due
to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or

• Experience a significant decline in gross receipts during the calendar quarter.

Hold Off on Payroll Taxes

Payroll taxes are typically paid on a regular schedule throughout the year. The last quarterly deposit for small businesses was July 15. But under the CARES Act, a business can defer the 6.2% Social Security tax component of federal payroll taxes for the period between March 27, 2020 and December 31, 2020. Businesses can then pay 50% of the deferred Social Security tax by December 31, 2021 and the remaining 50% Social Security tax by December 31, 2022.

Purchase Equipment

Buying work equipment during economic uncertainty sounds counterintuitive, but under Section 179 you can currently educt up to $1.04 million of eligible costs in 2020, with a phase-out threshold of $2.59 million. You can also claim 100% first-year bonus depreciation for the cost of qualified property. This break covers both new and used
qualified property.

If you’re unsure if your business qualifies for these tax credits, contact the professionals at KRD at 847-240-1040.

Categories

Newsletter signup

Receive our informative Newsletters with valuable tax, financial and business
operations information.

Archives

News

Read the latest news
from KRD and find out more.

5 Resolutions QuickBooks Online Users Should Make for 2021
KRD Makes Finalizing Your Tax Return Easy, Safe, & Convenient
CARES Act: Charitable Giving Changes Due to COVID-19

Request a callback

Would you like to speak to one of our financial advisors over the phone? Just submit your details and we’ll be in touch shortly. You can also email us if you prefer.

    I would like to discuss:
    CONTACT

    SCHAUMBURG

    1051 Perimeter Drive, 9th Floor
    Schaumburg, IL 60173

    Office: 847-240-1040
    Fax: 847-240-1055

    CHICAGO

    35 E. Wacker Dr., Suite 690
    Chicago, IL 60601

    Office: 312-201-6450
    Fax: 312-201-1286