The coronavirus has wreaked havoc in nearly every part of our lives, and as a result, the government has tried to step in and offer economic assistance. The CARES Act has been vital for both employees and employers as they seek to navigate the murky financial waters that COVID has created. But here’s the big question: how will all these government aid packages be taxed? That question and many, many others, including general tax questions, are answered by lead CPAs from our newest CPA partner: Hallows and Co.
- Adam Roundy, CPA
- Kade Hallows, CPA
- Ladd Hallows
In addition to over 20 Live questions submitted during our event, our CPAs also answered these questions submitted via email and our Facebook group:
- Can anyone confirm the PPP time period to spend funds has been extended? Did the house/senate officially declare 25ish weeks instead of 8? What is the deadline?
- Would the interest payment on my start up loan be a qualifying non-payroll expense for the PPP loan forgiveness? How about interest on financed equipment?
- I am hearing that new legislation is enabling 60% payroll and 40% non-payroll for PPP, is this correct?
- Is there a deadline or expiration to accept the EIDL loan capped at 3>75% and 150,000?
- I applied for a PPP early on and it was approved and received in early May. At the time I applied, the payroll amounts could not include funds for an owner "draw" (I am a sole proprietor Schedule C). So I received the funds after that was changed (where you could include an owner's draw in the amount you borrow). Can my owners draw from these funds and count towards the forgivable amount?
- I applied for unemployment as a self employed person here in Maryland and was approved. But I also got a PPP that I think I can draw from (see above question). I have certified with the state for the weeks leading up to the date I received the PPP. My understanding is that if I can legally withdraw money from PPP for myself, then I should not be drawing unemployment. Is that correct? Does that also include the $600 extra ( in other words I can't receive that too if I am making a draw on the PPP)
- I work for corp and put 5% into my 401k. What is the income limit on opening an IRA? Is there a total amount limit I can contribute in 401k and IRA? IS there income limits on traditional IRA and Roth?
We’ve always paid our year-end taxes out of our personal accounts but sources suggest that the S-corp should pay the owner’s taxes. With S-Corp tax info flowing thru to the personal taxes, this seems reasonable. What are your thoughts?
I would like to get my realtors license so I can qualify as a real estate professional - in order to have all real estate expenses deducted, is this a good idea?
I’ve been working from home doing admin work per the lock down, what can I write off as an office expense?
I read that we can 1099 a doctor if that doctor has a corporation. Is this true and legal?
What are creative and legal business owner tax deductions that many people don’t know about?
I am thinking about putting my children on payroll (glasses modeling and office duty) so I can start a retirement plan for them. Is this a good idea? What age is considered too young?
I was approved for my small business loan up to $150K. I have heard from someone who was approved for only $26K that there was no collateral required up to $25K, and it seemed like a great deal, but after that amount there was lots of language on collateral needed, plus an agreement for UCC-1 Filings, (I guess meaning that if a lien on your assets, the government gets paid first, and such - I don’t understand all the ramification of the UCC-1 Filings.). What I don’t know, if that is it the same cut off for everyone? Or will I be able to accept my loan for say: $149K, and have it be collateral free, with no UCC-1 contingencies? Can I ask for a copy of the loan before deciding how much to take? As it is set up now, I sign before I even see what I am agreeing to.
I am a S corp and W2 employee/owner. From 2/15/19-6/30/19, we averaged 75 hours/week (about 2 FTE) We had 6 employees but only I am full time. I also used a lot of 1099 which wasn't included in last year's hours. This year from 1/1/20-2/29/20, we averaged 98 hours/week (about 2.5 FTE) since everyone had to change to W2 (in CA). I have 16 employees but I am still the only full time employee. I have 2 that average 18 hours/week and the others only work 1-2 times a month.
We are currently still closed. I was funded on Monday May 4. I used their alternate start date of Sunday May 10. So using last years numbers, I paid myself 32 hours/week so I made $1920/week to stay under the max. I gave 30 hours to another doctor so she could be my other FTE and paid 2 different doctors every week to get to 75 hours. Now with the changes, it seems like FTE doesn't matter. I was planning on using all the PPP on payroll in 24 weeks. Today I had to pay for 5/24-6/6 payroll and I only used 32 hours/week and paid 1 doctor 24 hours and another doctor 8 hours and I didn't pay myself.
- Was that wrong not to hit 75 hours or even 45 hours (if I did 60% off the 75 hours for payroll) and was it wrong that I didn't pay myself? I thought I would pay myself next week when we actually go back to work. I was actually going to pay the doctors for the hours they worked instead of trying to hit a number.
And in order to be forgiven, do I just have to make sure that 60% is spend on payroll (I mentioned I was going to use the full PPP on payroll) AND get the hours back up to 98 hours/week by December 31 or when I submit the paperwork for forgiveness? Does it matter how many hours I use every week? And am I supposed to pay myself the max every week because I am the only full time employee?
We hope you enjoy this panel discussion! Click below to listen/watch!