8 Tax Updates You May Not Be Aware Of

thinking-532x266-1 8 Tax Updates You May Not Be Aware Of
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I recently attended a tax update webinar. Below are the highlights I’d like to share with you.

  1. Self-employed and others who are required to file estimated tax payments remember that the due date for the first and second quarter of 2020 was extended to July 15, 2020. If you are short on your payments for the year, remember to take the extended due date into account when calculating the underpayment penalty.
  2. Business meal expenses are 100-percent deductible in 2021 and 2022. Previously limited to 50 percent.
  3. Consolidated Appropriations Act (CAA) did away with the requirement that PPP forgiveness requests had to be reduced for any EIDL loan advances. Both can now be forgiven.
  4. Passive resort real estate rental properties cannot be grouped for purposes of the Qualified Business Income Deduction. The Eger case for the 9th Circuit involved professional realtors who sought to make their resort property active. They tried to count the hours the management company spent on the property as attributable to them. Court didn’t buy the argument and ruled that the property was passive and losses were limited by the passive loss rules.
  5. Partners and Subchapter S shareholders get an increase in the basis of their holdings in 2020 for PPP forgiveness in their companies, even though the forgiveness will not actually happen until 2021.
  6. Per the CAA, companies who retained employees during 2020 may still be eligible for the Retention Credit, even though they paid the salaries with PPP loans that were subsequently forgiven. Careful planning between PPP forgiveness and possible Retention Credit will be required.
  7. 529 Plan funds may now be used to pay up to $10,000 of student loans.
  8. Employers starting in 2020, pay up to $5,250 toward an employee’s student loan, tax-free.

Give me a call if you have any questions about taxes.

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