- The Consolidated Appropriations Act 2021 (CAA) includes a second round of the Payroll Protection Program loan as well as some updated tax benefits
- Learn how you and your business can take advantage of these major changes
We know that the difference between tax evasion and tax avoidance lies in how you play the system. Tax evasion means cheating the system, but tax avoidance means understanding how the tax code can benefit you and bring lower tax rates. Fortunately, the passing of CAA brought about major changes to the CARES Act and updates to current tax breaks.
The biggest change that has been clarified in CAA is the ability to deduct expenses paid for with PPP loan monies. This was heavily debated for months after the first round of applications of PPP loans opened; now, the IRS has clarified new guidance allowing for the so-called “double-dip” of deductibility.
The employee retention tax credit has been continued from CARES but includes a major expansion in eligibility.
Key changes:
- Qualified wages paid through June 30, 2021, are eligible for credit
- The tax credit is now available to businesses who have been affected directly by the government shutdown; must demonstrate 80% or greater of losses in 2020 (compared to the same quarter in 2019)
- The credit will cover 70% of qualified wages plus any employer-paid healthcare expenses
- Maximum credit is $7,000 per employee for each of the first two quarters of 2021 (totaling $14,000 for both)
- Certain government employers are now eligible for the tax credit
Want advice on how your business can benefit from these tax credits? Call our offices at 516-541-6549 or visit our website to meet our Coronavirus Response Team and learn more about how we can help.
Sincerely,
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email